Days Inventory Outstanding (DIO)

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Description of Days Inventory Outstanding. Explanation.

 

Days Inventory Outstanding (DIO)

Definition Days Inventory Outstanding (DIO). Description


Days Inventory Outstanding (DIO) is a financial performance ratio, which indicates how long it takes a company to turn its inventory into sales.


Although the average DIO varies from one industry and region to another, it can be said that the lower the DIO, the more efficient a company is.


Calculation of Days Inventory Outstanding. Formula

The DIO ratio is calculated as follows:


DIO = (Inventories / Cost of Goods Sold in Accounting Period) x Days in Accounting Period


In this formula, the days in accounting period are typically 90 days for quarterly statements or 365 days for yearly statements.


DIO forms one part of the Cash Conversion Cycle, which represents the length of time that it takes a company to convert resource inputs into cash flows.


Days Inventory Outstanding (DIO) is also known as Days Sales of Inventory (DSI), Days Inventory Held (DIH), Days in Inventory (DII) and Days Inventory on Hand (DOH).


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Discussions about Days Inventory Outstanding.


  What is the Meaning of a Particular Value of Days Inventory Outstanding (DIO)?
I would like to know: if my DIO is 40.5 then what can be interpreted from this? Is this good, bad, poor or do I need som (...)
 
 
 
 
Hot Optimal Inventory Turnover Ratio
What should be the ideal inventory turnover ratio in manufacturing industry and in a service industry? How can we achiev (...)
 
 
 
 
  Zero Level Days Inventory Outstanding (DIO) is is the Ultimate Goal
As mentioned in the definition '... The lower the DIO, the more efficient a company is...' You can read this also in a (...)
 
 
 
 

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