Days payable outstanding


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

Notes

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

External links


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