How to use the days inventory outstanding ratio So, in our first month of operations, our DIO was 10 days. Plugging those numbers into the formula, we get:ĭIO = ($10,000 / $30,000) * 30 days = 10 days We just completed our first month of operations, and we need our days inventory outstanding calculation. We make and sell shoes for both men and women. Welcome to ThriftyShoes, our discount shoe manufacturing company. For example, if you’re measuring DIO for a month, you need to make sure that both your ending inventory and cost of goods sold numbers are for that same month. It’s important to note that the DIO formula only works if you use consistent accounting methods and period lengths. Days in Period - The number of days in the time period being measured (usually a month or a year).
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