Calculate my DIO
Enter the balance sheet and income statement figures to get your DIO, the capital tied up and the inventory turnover ratio.
Average stock value held in the warehouse. Use the average of the opening and closing balance.
Total cost of goods and raw materials consumed during the period.
What is Days Inventory Outstanding (DIO)?
DIO (Days Inventory Outstanding), sometimes called Days Sales of Inventory (DSI), measures the average number of days a business takes to sell its stock. The lower the DIO, the faster stock converts into sales — and the less capital sits idle in the warehouse.
A high DIO means the business has cash sitting in goods that are not generating revenue. That tied-up capital can squeeze working capital and force the company to draw on external financing to fund day-to-day operations.
Example: Inventory = £150,000 | Annual COGS = £900,000
DIO = (150,000 ÷ 900,000) × 365 = 61 days
Average inventory is calculated by adding opening and closing stock and dividing by two. COGS is shown on the income statement under "Cost of goods sold" or "Cost of sales".
Sector Benchmarks — Typical DIO
The ideal DIO varies significantly across sectors. A tech company can hold almost no stock, whereas a manufacturer requires substantial safety inventory.
| Sector | Typical DIO | Annual turnover | Rating |
|---|---|---|---|
| Technology / Services | 5–20 days | 18–73× | A |
| Retail | 30–60 days | 6–12× | B |
| Wholesale | 30–75 days | 5–12× | C |
| Manufacturing | 45–90 days | 4–8× | C |
| Construction | 60–120 days | 3–6× | D |
Indicative figures based on ONS, Companies House aggregate data and European sector studies. The ideal DIO for each business also depends on its supply chain and safety stock policy.
How to Free Up Capital Tied Up in Stock
A high DIO doesn't necessarily mean poor management — it may reflect sector requirements or seasonality. But there are ways to reduce tied-up capital without compromising service levels.
Just-in-Time Ordering
Order against real sales history rather than optimistic projections. Reduce minimum order quantities by negotiating with suppliers — even if the unit cost is slightly higher, the total cost of holding stock falls.
Calculate working capital impact →Supplier Confirming
If a high DIO is unavoidable for operational reasons, offset it with longer supplier payment terms via confirming. The supplier gets paid on terms (or early at a discount); the business keeps the stock it needs without immediate cash-flow pressure.
Learn more about confirming →Clear Obsolete Stock
Identify items that haven't moved in 6-12 months. Offer discounts, return to supplier, or sell as scrap — any recovered value beats keeping capital idle. Obsolete stock also takes up space and incurs storage costs.
Calculate DPO — payment terms →Frequently Asked Questions about DIO
Related Calculators
Track this metric automatically
Connect your ERP and view this metric in real time on your Advanta dashboard.
Offset a high DIO with Confirming
If your business inherently requires high stock, offset it with longer supplier payment terms. Confirming lets suppliers get paid at maturity (or early with a discount) while your business keeps the liquidity it needs to operate.