Quick Definition

Days Payable Outstanding (DPO) measures the average number of days a company takes to pay its invoices from trade creditors and suppliers.

Formula

Examples

• 1A company with a DPO of 45 days typically takes about a month and a half to pay its suppliers.
• 2If a company's DPO increases from 30 to 50 days, it might be conserving cash but could risk straining supplier relationships.
• 3A decrease in DPO from 60 to 40 days indicates a company is paying its suppliers faster, which could be due to better cash management or supplier incentives for early payment.
• 4Comparing DPO values across similar companies can help assess how efficiently a company manages its cash outflows.

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