Days Inventory Outstanding Template
Days Inventory Outstanding Template
This Days Inventory Outstanding Template will show you how to arrive at the number of days inventory outstanding using the formula: Average Annual Inventory / Cost of Sales x # of Days in Period.
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What is Days Inventory Outstanding (DIO)?
Days inventory outstanding (DIO) is the average number of days that a company holds its inventory before selling it. The days inventory outstanding calculation shows how quickly a company can turn inventory into cash and is used to determine the liquidity of the company’s inventory. Days inventory outstanding is also known as “inventory days of supply,” “days in inventory,” or “the inventory period.”
Days Inventory Outstanding Formula
The formula for days inventory outstanding is as follows:
Days Inventory Outstanding = (Average inventory / Cost of sales) x Number of days in period
Where:
- Average inventory = (Beginning inventory + Ending inventory) / 2
- Cost of Sales is also known as Costs of Goods Sold
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Analyst Certification FMVA® Program
Below is a break down of subject weightings in the FMVA® financial analyst program. As you can see there is a heavy focus on financial modeling, finance, Excel, business valuation, budgeting/forecasting, PowerPoint presentations, accounting and business strategy.
A well rounded financial analyst possesses all of the above skills!
Additional Questions & Answers
CFI is the global institution behind the financial modeling and valuation analyst FMVA® Designation. CFI is on a mission to enable anyone to be a great financial analyst and have a great career path. In order to help you advance your career, CFI has compiled many resources to assist you along the path.
In order to become a great financial analyst, here are some more questions and answers for you to discover:
- What is financial modeling?
- How do you build a DCF model?
- What is sensitivity analysis?
- How do you value a business?
