Days payable outstanding (DPO)
Principles of Finance glossary · Financial Statements, Markets & Working Capital
Definition
Accounts payable divided by daily cost of goods sold; the average days to pay suppliers.
Days payable outstanding (DPO) in plain English
When a company buys supplies, it usually doesn't pay the supplier that same day — it gets a short grace period, and "accounts payable" is the pile of those unpaid supplier bills. Days payable outstanding measures how many days, on average, the company takes to actually pay them: you divide what it owes suppliers by its daily cost of goods. Taking longer to pay (a higher DPO) lets a company hold onto its cash a bit longer — handy, like paying a friend back on the last allowed day rather than instantly — but stretch it too far and suppliers get annoyed or cut you off.
Also called: DPO
Practice Days payable outstanding (DPO)
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