To calculate Days Inventory Outstanding (DIO), divide the average inventory by the cost of goods sold (COGS) per day. The formula is: DIO = (Average Inventory / COGS) * 365. Average inventory is typically calculated as the sum of the beginning and ending inventory divided by two. This metric provides insights into how long it takes for a company to sell its inventory, aiding in assessing inventory management efficiency.
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Emagia is a leading provider of AI-powered Order-to-Cash (O2C) automation platform that modernizes finance operations for midsize to large global businesses. Many global businesses and shared service centers use Emagia’s Enterprise Receivables Management System to transform to digital world-class operations in credit, invoicing and payments, receivables, collections, deductions, cash application and cash forecasting. Emagia solutions improve their customers DSO, cash flow, credit risk, operational cost, compliance and profitability.
