Days Payable Outstanding (DPO) measures how long your company takes to pay its suppliers, on average. It’s an important metric because it provides a general gauge of how your business manages supplier payments and cash flow.
An increasing DPO may indicate that your company is taking longer to pay bills. This can improve short-term cash flow. However, it could also signal payment delays or supplier pressure.
Formula: DPO = (Average Accounts Payable ÷ Cost of Goods Sold) × Number of Days in Period
How to use the calculator
Enter the following information to calculate your DPO:
- Average A/P: Use accounts payable from the balance sheet. Add accounts payable at the beginning and end of the period, then divide by two.
- Cost of Goods Sold: Use cost of goods sold from the income statement for the same period.
- Number of Days in the Period: Typically a month, quarter, or year.
| Average A/P | $ |
| Cost of Goods Sold | $ |
| Number of Days in Period | |
| Days Payable Outstanding | 45.6 days |
DPO should be evaluated in context. A higher DPO helps preserve cash and may improve your cash conversion cycle. However, a higher DPO should also be balanced against supplier payment terms, early-payment discounts, and vendor relationships. The goal is to manage payments in a way that supports cash flow without creating supplier pressure.
Note: This calculator is for educational purposes only and not intended as financial advice. Please consult a professional if you require financial advice.
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Marco Terry is the Managing Director of Commercial Capital LLC and has over two decades of experience in asset-based finance. He has worked with small and mid-sized companies across the United States, Canada, and Australia. Marco holds a Master of Science in Finance.