Overview
Days Inventory Outstanding (DIO), shows how effectively assets, receivables, inventory, and operating resources are utilized. Quarterly (Q) scope increases short-term volatility visibility.
Formula
365 / Inventory Turnover
How to Interpret
High Value
When Days Inventory Outstanding (DIO) stays high, persistence should be validated with cash and margin evidence.
Low Value
When Days Inventory Outstanding (DIO) is low, confirm whether weakness is cyclical or structural via operating cash evidence.
Where It Is Used
Defining Days Inventory Outstanding (DIO) alert thresholds against the company’s own historical median reduces false positives.
