Days payable outstanding ratio is used in accounting and finance departments that measures how many days, usually on average, it takes a company to provide payment to its suppliers. The higher a company’s DPO, the longer it takes to pay its bills. Days payable outstanding is calculated using the formula shown above. To calculate DPO you would:
Let’s say K&K Manufacturing has an average accounts payable of $200,000 over a 365 day period, and their cost of sales is $750,000. To calculate the DPO we would:
High or Low DPO?
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November 2023
