Days Payable Outstanding

Written by Jerry Ratzlaff on . Posted in Manufacturing Engineering

Days payable outstanding, abbreviated as DPO, is the number of average days from when a company purchases inventory and materials until the supplier is paid.

 

Days Payable Outstanding Formula

\(\large{ DPO =  \frac{ AP \; n }{ COGS }  }\)   

Where:

\(\large{ DPO }\) = days payable outstanding

\(\large{ AP }\) = accounts payable

\(\large{ COGS }\) = cost of goods sold

\(\large{ n }\) = number of days

 

Tags: Equations for Manufacturing