Days of Inventory Calculation, otherwise known as Days Inventory Outstanding (DIO) is an important metric used by business owners and financial analysts to assess the efficiency of a company’s inventory management. Essentially, it measures how long, on average, it takes for a company to turn its inventory into cash. DIO is calculated by dividing the number of days in a period over the average inventory for that same period. This metric is a key indicator of how quickly a business can move its goods from warehouse to consumer and determine necessary corrective actions when there are discrepancies in inventory turnover.