Days Inventory Outstanding

The days inventory outstanding — or DIO — equals 365 divided by inventory turnover. A DIO of 30 means inventory sits for 30 days on average before sale. Lower DIO signals faster turnover and less working capital tied up.

Days Inventory Outstanding — key facts

Days inventory sits before conversion to sales.


Formula	365 ÷ inventory turnover
Unit	Days
Benchmark	Varies by industry
Lower	Faster turnover, less working capital
Higher	Slower turnover, more risk
Data required	Inventory turnover ratio

The intuition

A retailer with inventory turnover of 12x per year has DIO of 365 ÷ 12 = 30 days. Inventory sits for roughly 30 days before sale.

DIO is intuitive: it expresses inventory time rather than velocity.

How to calculate it

365 ÷ Inventory turnover.

Example: A company with inventory turnover of 9 has DIO of 365 ÷ 9 = 41 days.

When it works well

Intuitive interpretation. Days are easier to understand than turns per year.

Monitoring trends. Rising DIO with flat revenue signals slowing demand or inventory buildup.

Comparing across companies. Two companies with identical DIO have similar inventory efficiency.