Days inventory outstanding measures the average number of days inventory sits before being sold. Four modes below: compute DIO, find maximum inventory from a DIO target, simulate inventory reduction, and compare against sector benchmarks.
Formula: DIO = (average inventory ÷ COGS) × 365
Have a DIO target? Compute the maximum average inventory that still meets it: max inventory = target DIO × COGS ÷ 365.
Move the slider to see how much cash is freed when average inventory is reduced, along with DIO before and after.
| Sector | Illustrative DIO range | Characteristics |
|---|---|---|
| Restaurants / fast-food F&B | 5–15 days | Perishable ingredients, daily turnover |
| Food & beverage retail | 20–35 days | Routine stock, monitored expiry |
| Consumer electronics | 35–55 days | Short product cycles, fast obsolescence |
| General manufacturing | 45–75 days | Raw materials + work in process |
| Automotive & components | 55–85 days | Layered supply chain |
| Apparel & fashion | 60–100 days | Seasonal, many SKU variants |
| Pharmaceuticals | 70–110 days | Strict regulation, large safety stock |
| Furniture & furnishings | 75–120 days | Long production lead times |
Days inventory outstanding (DIO) measures the average number of days inventory sits in the warehouse before being sold. A lower DIO means inventory converts to sales faster and less cash is tied up in stock.
The DIO formula is (average inventory ÷ COGS) × 365. Average inventory = (beginning inventory + ending inventory) ÷ 2, and COGS is the cost of goods sold over the same period. Example: (Rp200,000,000 + Rp300,000,000) ÷ 2 = Rp250,000,000; Rp250,000,000 ÷ Rp1,500,000,000 × 365 = 60.83 days.
There is no universal DIO number that applies to all businesses; a reasonable figure differs by sector because product characteristics and supply chains differ. The common way to judge it is to compare the company’s DIO against its own historical trend and its sector average. The benchmark table on this page is illustrative, not an official standard.
All three measure days in the cash cycle: DIO (days inventory outstanding) = days inventory sits before being sold; DSO (days sales outstanding) = days for receivables to be collected from customers; DPO (days payable outstanding) = days payments to suppliers are delayed. All three combine into the cash conversion cycle: CCC = DIO + DSO − DPO.
Inventory balances fluctuate over a period — for example piling up before the busy season, then shrinking after it. Using the average of beginning and ending inventory smooths those fluctuations so DIO reflects typical conditions across the period, not a single date’s snapshot.
Textbooks use 365 days; some analysts and banks use 360 days for simplicity. The difference is small: a DIO of 60.83 days on a 365-day year equals 60.00 days on a 360-day year. What matters is consistency — every comparison across periods or companies uses the same day basis.
A low DIO means cash is freed from inventory faster, but a DIO that is too low can mean stockout risk and lost sales. A high DIO means more cash tied up in the warehouse, but some industries genuinely need large stocks because of long lead times. Assessment always uses sector context and company trends.
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