Days inventory outstanding

Days inventory outstanding (DIO) is the average number of days inventory sits in stock before being sold, calculated as average inventory divided by cost of goods sold, multiplied by 365.

ByHoang TruongUpdated July 5, 2026

See it move

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A formula card shows days inventory outstanding as average inventory divided by cost of goods sold, multiplied by 365. Marbella Home Goods carried average inventory of €300,000 against cost of goods sold of €2,190,000, or €6,000 per day. Dividing €300,000 by €6,000 gives 50 days: stock sits in the warehouse for 50 days, on average, before it is sold.

Where it fits

SubjectFinancial AccountingCoreTopicInventory & COGSCoreTopicFinancial Statement Analysis & RatiosCore

The formula

LaTeX

\text{DIO} = \dfrac{\text{Average inventory}}{\text{Cost of goods sold}} \times 365

Variables

$A v g I n v$: Average inventory (mean of opening and closing inventory) (€)
$C O GS$: Cost of goods sold for the period (€)

Gives the average number of days inventory is held before it is sold.

Check yourself

PracticeCORE

An electronics distributor reports cost of goods sold of €3,650,000 and revenue of €5,110,000 for the year. Inventory was €350,000 at the start of the year and €450,000 at the end. Using average inventory and a 365-day year, what is the distributor's days inventory outstanding?

Select an answer to check your understanding.