What does DIO stand for in financial analysis?

[accountinglads]

dio meaning is an abbreviation of Days Inventory Outstanding. It shows the number of average days that the inventory can sit idle. To determine the inventory efficiency of a company, it is imperative to use OI. The low DIO indicates quick flowing inventory and good sales. On the other hand, excessive DIO would indicate poor sales velocity or warehousing. It is very common in supply chain management to optimize inventory and benefit the cash flow. One reason why companies would like to reduce the DIO is to keep their inventories at an appropriate level so that they can supply the customers all the time.