DPO (Days Payable Outstanding)
The average number of days a company takes to pay its suppliers — a measure of how effectively payables are managed as a source of working capital funding.
Also known as: Days Payable Outstanding, Creditor days, Payable days
One-line definition
DPO measures how long a company holds on to supplier cash before paying — higher DPO means more supplier-funded working capital.
Formula
DPO = (Trade payables ÷ Cost of goods sold) × 365
TS watch-out
Artificially high DPO at period-end (stretching payables) flatters NWC at the measurement date. TS teams look for seasonality in payables and payment term changes that signal manipulation.
Related terms
Net Working Capital
The normalised level of working capital a target business needs to operate — a direct lever on the purchase price.
DSO (Days Sales Outstanding)
The average number of days it takes a company to collect payment after a sale has been made — a key working capital metric.
DIO (Days Inventory Outstanding)
The average number of days a company holds inventory before selling it — a measure of inventory efficiency and supply chain management.
Cash Conversion Cycle
The time (in days) it takes a company to convert its investments in inventory and other resources into cash from sales.