What is the calculation to determine DPO?

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A: Days payable outstanding (DPO) is a number representing the average number of days a company takes to settle its trade payables. There is benchmarking information regarding DPO in our Disbursements and P-card Use Survey.

You can calculate DPO in a few ways, including:

DPO = (accounts payable / cost of sales) * Days
(days are according to period looked at, typically 90 or 360)

or

DPO = (current payables outstanding / avg. daily disbursements)

This latter formula is similar to the one behind the TAPN DPO Calculator although there the input is monthly data that is converted to a daily average using a 365-day year.

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