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Definition
Days inventory outstanding (DIO), or stock days, is the average number of days stock sits in the business before it is sold. It is derived from stock turnover and measures how long cash stays frozen as inventory.
In plain terms
A DIO of 60 means, on average, stock sits for two months between arriving and selling. The longer it sits, the longer your cash is trapped and the higher your working-capital need. Fast-moving businesses aim to keep DIO low.
Why it matters
DIO is the stock leg of the cash conversion cycle. Reducing it — clearing slow stock, ordering little and often — releases cash directly. See how to reduce stock holding.
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