DIO Calculator
Find out how many days, on average, stock sits on your books before it is sold or used. Enter your inventory and cost of goods sold to see DIO, inventory turnover and the cash a shorter cycle would free up.
Enter any two and we work out the third. Average inventory is calculated for you.
Your budget, last year's number or a peer average. Leave blank to skip the comparison.
One-time cash released from stock, based on your average daily COGS.
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How to calculate DIO
Days inventory outstanding tells you how long your money stays locked in stock. Divide average inventory by cost of goods sold for the period, then multiply by the days in that period.
The value of raw material, work in progress and finished goods you hold. Add opening and closing inventory from the balance sheet or stock ledger and divide by two.
Example: (₹11 Cr + ₹13 Cr) ÷ 2 = ₹12 CrThe cost of the stock you sold or consumed in the same period. Take it from the profit and loss statement: materials consumed, purchases of stock in trade and the change in inventories.
Example: COGS for July to September = ₹18 CrThe length of the period your COGS covers. Use 30, 90 or 365, or the exact days for a half year or a broken period.
Example: one quarter = 90 daysThe standard method. Averaging smooths out a spike at month end or a big shipment that landed on the last day.
Average inventory ÷ COGS × daysWork out inventory turnover first, then convert it to days. It gives exactly the same answer.
Days ÷ (COGS ÷ average inventory)Some analysts use only closing inventory. It is quicker but swings with year-end stock builds, so we default to the average.
Closing inventory ÷ COGS × days| Opening inventory | ₹11,00,00,000 |
| Closing inventory | ₹13,00,00,000 |
| Average inventory | ₹12,00,00,000 |
| COGS in the quarter | ₹18,00,00,000 |
| Inventory turnover | 1.5x |
| DIO | 60.0 days |
- Average the inventory: (11 crore + 13 crore) ÷ 2 = 12 crore
- Divide by COGS: 12 crore ÷ 18 crore = 0.667
- Multiply by the days: 0.667 × 90 = 60 days
- Price each day: 18 crore ÷ 90 = 20 lakh of stock per day, so cutting DIO by 10 days frees about 2 crore
What is a good DIO by industry
There is no single good number. A grocery chain turns stock in weeks, while a capital goods maker can hold parts for months. Compare yourself with your own trend and your closest peers.
| Industry | Typical DIO | Why it lands there |
|---|---|---|
| FMCG and grocery retail | 20 to 45 days | Fast-moving, perishable or short shelf-life goods |
| Fashion and eCommerce | 60 to 120 days | Seasonal ranges, many SKUs and sizes, returns |
| Manufacturing (discrete) | 60 to 110 days | Raw material, work in progress and finished goods all count |
| Pharma | 90 to 150 days | Batch production, quality release and buffer stock for APIs |
| Automotive components | 30 to 60 days | Just-in-time supply to OEMs keeps stock lean |
| Logistics and services | Under 15 days | Mostly spares and consumables, little resale stock |
Indicative ranges drawn from published working capital studies and listed company filings, not audited benchmarks. Product mix and import lead times move the number a lot.
| DIO trend | Signal | What to check |
|---|---|---|
| Rising quarter on quarter | Watch | Slow-moving or obsolete SKUs, over-ordering, falling sales |
| Falling steadily | Usually good | Confirm you are not running into stock-outs or lost orders |
| Sudden drop | Check | Write-downs or a one-off clearance sale can flatter DIO |
Get a one-page report with your DIO, turnover, cash tied up per day and the cash a shorter cycle frees up.
How to reduce DIO without risking stock-outs
Lower is better only up to the point where you start missing orders. The aim is the right stock in the right place, not the least stock possible.
Split SKUs by value and by age. The slow C items older than 180 days are usually where the cash is stuck.
Reorder points based on actual consumption, not last year's buffer, stop stock from piling up after a slow month.
Every week of lead time needs a week of safety stock. Local or consigned supply cuts both.
Liquidate, return or write off obsolete items. Carrying them costs storage, insurance and capital every month.
Work in progress often hides the longest delays. Track it by stage, not just as one balance sheet line.
Inventory days are one third of your cash conversion cycle. Check how fast customers pay with the DSO calculator and how long you take to pay suppliers with the DPO calculator.
Frequently asked questions
Divide average inventory by cost of goods sold for the period and multiply by the number of days in that period. With ₹12 crore of average inventory and ₹18 crore of quarterly COGS, DIO is 0.667 × 90 = 60 days.
It depends on the industry. Grocery and FMCG businesses often run 20 to 45 days, while manufacturers and pharma companies can sit at 90 days or more. A DIO that is stable or falling without stock-outs is usually a healthy sign.
They describe the same thing in different units. Inventory turnover is COGS divided by average inventory, the number of times you sell through stock in a period. DIO is the period's days divided by that turnover, so a quarterly turnover of 1.5 means 60 days.
A high DIO means cash is tied up in stock for longer, with more risk of obsolescence and higher holding costs. It can be deliberate, for example building stock before a festive season or ahead of a known price rise.
Inventory is carried at cost, so it should be compared with cost of goods sold, which is also at cost. Using revenue mixes in your margin and makes DIO look shorter than it really is.
Cash conversion cycle is DIO plus DSO minus DPO. Every day you cut from DIO shortens the cycle by a day and releases roughly one day of COGS in cash.
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