Days Payable Outstanding (DPO) Calculator
From accounts payable and cost of goods sold, compute how many days a company takes to pay suppliers (DPO).
Input Data
Results
At a glance:DPO = accounts payable / COGS x period days (365 for a year). It shows the average days to pay suppliers. Higher = hold cash longer (interest-free financing, better liquidity); lower = pay faster. But over-stretching harms supplier ties and may forgo early-pay discounts. Right level depends on industry and bargaining power. WARNING: DPO alone doesn't show forgone discounts or strained relations; compare within industry. Education, not advice.
Formula
DPO = accounts payable / COGS × period days.
CCC = DSO + DIO − DPO (DPO shortens the cycle).
$$DPO = \\dfrac{\\text{Accounts payable}}{\\text{COGS}} \\times \\text{Days in period}$$$$CCC = DSO + DIO - DPO$$How to Use
- Enter accounts payable at period end.
- Enter COGS for the same period.
- Enter the period days (365 for a year) for DPO.
FAQ
What is DPO and how is it computed?
DPO = accounts payable / COGS x period days (365 for a year). Example: AP 800,000, annual COGS 6,000,000, 365 days → (800,000/6,000,000)x365 ≈ 48.7 days. It tells how long, on average, you take to pay suppliers.
Is a higher DPO better?
Within reason, yes — delaying payment keeps cash for operations (interest-free supplier credit) and eases short-term liquidity. But too high strains supplier relationships, risks supply disruption, and may forgo early-payment discounts (often worth more than the financing). Balance cash needs against relationship health.
How does DPO relate to the cash conversion cycle?
CCC = DIO + DSO - DPO. DPO is the only 'lengthening' term — the longer you pay suppliers, the shorter the cycle and the less working capital tied up. So managing DPO (and DIO, DSO) is how firms optimise the cash conversion cycle.
What are the Hong Kong SME implications and caveats?
HK SMEs often lack bargaining power; payment terms (net 30/60/90) directly affect cash flow. Stretching suppliers can ease short-term pressure but risks relationships and discounts. The HKTDC and HKPC advise balancing; the SME Financing Guarantee Scheme can easeliquidity. Caveats: (1) DPO doesn't show forgone discounts; (2) compare within industry; (3) use consistent period; (4) watch whether 'AP' includes only trade payables. Education, not advice.
How does DPO relate to the cash conversion cycle?
The Cash Conversion Cycle (CCC) = DIO + DSO - DPO. DIO and DSO are 'money tied up' (inventory, receivables); DPO is 'money delayed' (payables). Only DPO reduces the cycle, so lengthening payment shortens CCC and frees working capital. But DPO has a ceiling — over-stretch and you hurt suppliers and lose discounts. The art is optimising all three together, not maximising DPO alone.
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References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.