COMPARE
Inventory turnover vs days inventory outstanding.
365 over turnover equals DIO. The two numbers report the same fact. Which one to put on the board page depends on the audience.
The identity
DIO = 365 / inventory turnover
A 4.0x ratio is 91 days. A 6.0x ratio is 61 days. A 14.0x grocery ratio is 26 days. The ratio compresses the magnitude of differences (4 to 6 vs 91 to 61); the day view exposes the cash cost (30 days less inventory is 30 days less working capital).
NYU-STERN 2026 INVESTOPEDIA 2026
Which to report
- Board: turnover ratio with industry-median comparator.
- Bank: DIO with the working-capital release attached.
- Operations: both, weekly.
Why the two numbers occasionally seem inconsistent
They never are if both use the same denominator (annualised COGS). Apparent inconsistencies are almost always a period-mismatch: turnover reported on calendar-year COGS while DIO is computed on month-end inventory. Pin both to trailing-twelve-month inputs.