Days Inventory Outstanding

Days Inventory Outstanding (DIO) measures how long a company typically takes to sell its inventory, expressed in days. It indicates the efficiency of inventory management—fewer days suggest quicker sales and better liquidity, while more days may point to slow-moving stock and potential issues. The calculation considers the average inventory held and the cost of goods sold over a period, providing insight into how effectively a company turns its inventory into sales. Essentially, DIO helps assess how well a business manages its stock and cash flow.