How to Use the Days Inventory on Hand Calculator
Days inventory on hand (DIO) tells you how many days of sales are sitting in your warehouse right now. The formula is average inventory ÷ annual COGS × 365 days, and a higher number means cash stays locked up in stock for longer.
This calculator uses a 365-day basis, the same basis as the inventory turnover, DSO, DPO and cash conversion cycle calculators. Mixing bases (360 days in one metric, 365 in another) makes the ratios inconsistent with each other, so keep one basis across the set.
The denominator is COGS, not revenue, because inventory is carried at cost. Using revenue makes days on hand look shorter by your whole margin. Enter a target to see the average inventory that target implies and how far your current balance sits from it. Results are for planning; highly seasonal businesses should also look at month-by-month balances.
Frequently Asked Questions
Inventory is carried at cost, so COGS keeps the units consistent. Using revenue makes days on hand look shorter than reality by the size of your gross margin.
You can, but then turnover, DSO, DPO and CCC all need the same 360-day basis or the metrics stop lining up. This calculator is fixed at 365 days for that reason.
No. Push it too low and stockouts and lost sales go up. A target that accounts for supplier lead time and safety stock is a more useful benchmark than simply minimizing the number.