Days Inventory Outstanding(DIO)
Days inventory outstanding (DIO), defined also as days sales of inventory, indicates how many days on average a company turns its inventory into sales.
It shows how quickly management can turn inventories into cash.
It shows how quickly management can turn inventories into cash.
Calculate the DIO formula using the following equation:
DIO = (average inventory / cost of goods sold) * 365 days
DIO(monthly) = (average inventory / cost of goods sold) * 30.42
* 30.42 = 365 days / 12 month
* 30.42 = 365 days / 12 month
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