Days Payables Outstanding (DPO)
Corporate Credit Analysis glossary · Financial Statement Analysis & Cash Flow Dynamics
Definition
Payables divided by average daily COGS; a measure of payment timing. Stretching DPO can be a sign of liquidity stress.
Days Payables Outstanding (DPO) in plain English
DPO flips the question around: how many days does the company take to pay ITS OWN suppliers? You divide what it owes suppliers by its daily cost of goods, giving "days' worth of bills it hasn't settled yet." Stretching this out can be smart cash management, but if it suddenly balloons, it often means the company is short on cash and dragging its feet to hold onto money longer. It's like waiting until the very last day (or past it) to pay a bill — occasionally clever, but if you're ALWAYS doing it, you're probably running low on funds.
Also called: DPO
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