DYK: DPO, Days Payable Outstanding

Days payable outstanding (DPO) is an efficiency ratio that measures the average number of days a company takes to pay its suppliers. DPO is typically measured either quarterly or yearly; and can vary significantly from year to year, company to company and industry to industry based on how well or how poorly the company, the industry and the overall economy are performing.

The longer companies take to pay their creditors, the more money that company has on hand, which is good for working capital. But if a company takes too long to pay its creditors, those creditors may refuse to extend credit in the future, may offer less favorable terms or deny a discount for timely payment.

By | 2018-01-31T17:41:18-05:00 April 26th, 2016|