The formula used in the calculations is:
\[ \text{Average Inventory} = \frac{\text{Beginning Inventory} + \text{Ending Inventory}}{2} \]
\[ \text{DIO} = \left(\frac{\text{Average Inventory}}{\text{Cost of Goods Sold (COGS)}}\right) \times \text{Days in Accounting Period} \]
This calculator computes the Days Inventory Outstanding (DIO) based on the input values of beginning and ending inventory, cost of goods sold (COGS), and the days in the accounting period. DIO measures the average number of days that a company holds inventory before selling it.
Let's assume the following:
Calculate the average inventory:
\[ \text{Average Inventory} = \frac{500,000 + 750,000}{2} = 625,000 \]
Calculate the days inventory outstanding (DIO):
\[ \text{DIO} = \left(\frac{625,000}{6,500,000}\right) \times 365 = 35.096 \text{ days} \]
Therefore, the DIO is 35.096 days.
