HOMEPAGE

Days Payables Outstanding (DPO)

Definition

DPO measures how long a company takes to pay its suppliers.

$$\text{DPO}=\frac{\text{Accounts Payable}}{\text{COGS}}\times 365$$

Why It Matters

• Higher DPO improves cash flow.
• Lower DPO means faster payments and less supplier credit.
• Key part of the Cash Conversion Cycle.

Example

AP = $40M COGS = $300M

$$\text{DPO}=\frac{40}{300}\times 365=48.7\text{days}$$