Days Inventory Outstanding (DIO)
The average number of days a company holds inventory before selling it.
What is DIO?
Days Inventory Outstanding (DIO) measures the average time, in days, that inventory sits on the balance sheet before being sold. It equals 365 divided by the Inventory Turnover Ratio. A lower DIO indicates lean, fast-moving inventory and efficient supply chain management; a higher DIO signals overstocking, slow demand, or production delays. DIO is a key component of the Cash Conversion Cycle — reducing DIO shortens the cycle and frees up working capital.
Formula
DIO = 365 ÷ Inventory Turnover Ratio
Worked Example
Worked example — Apple Inc. (AAPL)
FY2024
Step 1 Inventory turnover: $210,352M ÷ $6,809M = 30.89x
Step 2 DIO = 365 ÷ 30.89 = 11.82 days
Step 3 → Apple holds inventory for only about 12 days before selling — a world-class supply chain
Source: Apple 10-K FY2024 (2024-11-01)
Calculate DIO
COGS divided by average inventory (calculate with the Inventory Turnover calculator)
Days Inventory Outstanding
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Not investment advice.
How to Interpret DIO
< 20
Excellent — very lean inventory management
20 – 45
Good — efficient stock management
45 – 90
Average — moderate inventory holding period
> 90
High — slow-moving inventory or overstocking risk