What Does a High or Low Days Inventory Outstanding Signify?

A high Days Inventory Outstanding (DIO) suggests slower inventory turnover, potentially indicating excessive inventory levels or inefficiencies in sales and operations. This could lead to increased carrying costs, storage expenses, and risks of obsolescence. Conversely, a low DIO signifies efficient inventory management, with faster turnover rates, optimized cash flow, and reduced carrying costs, contributing to improved profitability and liquidity.

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