Days payable outstanding
Encyclopedia
Days payable outstanding (DPO) is an efficiency ratio that measures the average number of days a company takes to pay its suppliers.
The formula for DPO is:
where ending A/P is the accounts payable balance at the end of the accounting period being considered and COGS/day is calculated by dividing the total cost of goods sold per year by 365 days.
The formula for DPO is:
where ending A/P is the accounts payable balance at the end of the accounting period being considered and COGS/day is calculated by dividing the total cost of goods sold per year by 365 days.
See also
- Working capital analysisWorking capitalWorking capital is a financial metric which represents operating liquidity available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Net working capital is...
- Days Sales OutstandingDays Sales OutstandingIn accountancy, Days Sales Outstanding is a calculation used by a company to estimate their average collection period. A low number of days indicates that the company collects its outstanding receivables quickly. Typically, Days sales outstanding is calculated monthly...
- Days In Inventory
- Cash Conversion CycleCash conversion cycleIn management accounting, the Cash Conversion Cycle measures how long a firm will be deprived of cash if it increases its investment in resources in order to expand customer sales. It is thus a measure of the liquidity risk entailed by growth...