Inventory Days, also called Days Inventory Outstanding, shows how long stock is held before it is sold or used in production. In MSME credit analysis, it helps estimate working-capital cycle and whether inventory levels are reasonable for the borrower’s industry. A high DIO can mean slow-moving stock, overstocking, weak demand, obsolete inventory, or seasonal build-up. For example, a garment manufacturer may carry inventory before festive demand, while the same level may be worrying for a fast-moving trader. This ratio matters because money locked in inventory can reduce liquidity and increase borrowing need. The common mistake is to compare DIO across unrelated industries; it should be read with sales pattern, stock ageing, stock audit findings, and production cycle.