Days inventory outstanding (DIO) approximates how long inventory is held before sale. Divide average inventory at cost by cost of goods sold and multiply by days in the same reporting period. The result is days, using consistent valuation for numerator and denominator.[1][2]
This is a historical financial measure, not forward-looking unit-based days of cover. With strong seasonality, averaging only opening and closing stock may mislead. Use more observation points where possible and explain unusual stock build-ups before drawing purchasing conclusions.
Content updated:
Sources
Compiled with AI assistance using public sources. General explanation, not individual legal or tax advice. Describing a concept does not mean Zoloo offers it as a feature.