Calculate my DIO
Enter your balance-sheet and income-statement figures to get your DIO, the capital tied up and inventory turnover.
Average value of stock in the warehouse. Use the average of the start and end of the year.
Total cost of goods and materials consumed in the period.
What is DIO?
DIO (Days Inventory Outstanding), also known as the average inventory period, measures the average number of days a company takes to sell its stock. The lower the DIO, the faster stock is converted into sales, and the less capital sits tied up in the warehouse.
A high DIO means the company has money parked in goods that are not generating revenue. That tied-up capital can put pressure on working capital and force the business to turn to external financing for day-to-day operations.
Example: Inventory = €150,000 | Annual COGS = €900,000
DIO = (150,000 ÷ 900,000) × 365 = 61 days
The average inventory is obtained by adding the stock at the start and end of the year and dividing by two. COGS appears in the income statement under "Cost of goods sold and materials consumed".
Sector benchmarks — typical DIO
The ideal DIO varies widely depending on the line of business. A technology company can hold almost no stock, whereas a manufacturer needs a considerable safety-stock buffer.
| 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 values based on Banco de Portugal data and European sector studies. The ideal DIO for each company also depends on its supply chain and safety-stock policy.
How to free up the capital tied up in stock
A high DIO does not necessarily mean poor management — it can be a sector requirement or the result of seasonality. But there are ways to reduce tied-up capital without compromising your ability to serve customers.
Just-in-time ordering
Order based on 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 the impact on working capital →Confirming with suppliers
If the DIO is high out of operational necessity, offset it with longer supplier payment terms via confirming. The supplier is paid on term (or pulls it forward with a discount); the company keeps the stock it needs without immediate treasury pressure.
Learn more about confirming →Clearing obsolete stock
Identify items with no turnover for more than 6–12 months. Offer discounts, return them to the supplier or sell them off — any value recovered beats keeping capital idle. Obsolete stock also takes up space and generates storage costs.
Calculate DPO, payment term →Frequently asked questions
Offset a high DIO with Confirming
If your stock demands tied-up capital, confirming extends supplier payment terms and factoring advances receivables, freeing the liquidity that inventory holds back — without creating new debt.