To calculate Days Inventory Outstanding (DIO), divide the average inventory by the cost of goods sold (COGS) per day. The formula is: DIO = (Average Inventory / COGS) * 365. Average inventory is typically calculated as the sum of the beginning and ending inventory divided by two. This metric provides insights into how long it takes for a company to sell its inventory, aiding in assessing inventory management efficiency.
Reimagine Your Order-To-Cash with AI
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Emagia is a leading provider of AI-powered Order-to-Cash (O2C) automation platform that modernizes finance operations for midsize to large global businesses. Many global businesses and shared service centers use Emagia’s Autonomous O2C to transform to digital world-class operations in credit, invoicing and payments, receivables, collections, deductions, cash application and cash forecasting. Emagia solutions improve their customers DSO, cash flow, credit risk, operational cost, compliance and profitability.
