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Days inventory outstanding (DIO) is the average number of days that a company holds its inventory before selling it. The days inventory outstanding calculation shows how quickly a company can turn inventory into cash and is used to determine the liquidity of the company’s inventory.
Streamline your inventory management with our Excel guide on Days Inventory Outstanding (DIO) — techniques, impacts, and step-by-step calculation explained!
23 Νοε 2023 · Days in Inventory Formula. Companies use days in inventory to determine their efficiency in converting inventory into sales. It is calculated by dividing the number of days in the period by the inventory turnover ratio. The numerator of the days in the Formula is always 365, the total number of days in a year.
26 Ιουλ 2023 · The formula is as below: Days Inventory Outstanding = Average Inventory / Cost of Goods Sold * 365. To calculate the average inventory, you take the mean of the inventory held at the start of the year (opening inventory) and at the end of the year (closing inventory).
19 Ιαν 2024 · Inventory days formula and why it’s useful. Finding the days in inventory for your business will show you the average number of days it takes to sell your inventory. The lower the number you calculate, the better return on your assets you’re getting.
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17 Ιαν 2024 · The days inventory outstanding formula is a metric that measures the average number of days a company holds an item before it is sold. To calculate DIO, choose a time period based on your sales cycle or accounting period, and use the following formula: Days inventory outstanding = (Average inventory / Cost of goods sold) x (# of Days)
