Days payable outstanding

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:

$DPO = \dfrac{ending~A/P}{COGS/day}$

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.^[1]

See also

• Working capital analysis
• Days Sales Outstanding
• Days In Inventory
• Cash Conversion Cycle

Notes

1. ^ Berman, K., Knight, J., Case, J.: Financial Intelligence for Entrepreneurs, page 151. Harvard Business Press, 2008.

External links

• Basic Instruments of Working Capital Management