acalculator

What is my DPO?

Type your accounts payable, your cost of goods sold and the days in the period. The DPO calculator shows how many days, on average, the business takes to pay its suppliers.

Your numbers

Days payable outstanding
41.06

With $45,000.00 of average payables and $400,000.00 cost of goods sold over 365 days, DPO is 41.06 days.

Accounts payable turnovertimes
8.89
Average accounts payable
$45,000.00
Cost of goods sold per day
$1,095.89

Days payable outstanding: 41.06. With $45,000.00 of average payables and $400,000.00 cost of goods sold over 365 days, DPO is 41.06 days.

Days payable outstanding by accounts payable at the end

The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use

How to calculate

Works out days payable outstanding (DPO), the average number of days a business takes to pay its suppliers, from accounts payable, cost of goods sold and the days in the period, with the accounts payable turnover.

Example with the default inputs (Accounts payable at the end $45,000.00, Cost of goods sold $400,000.00, Days in the period 365): With $45,000.00 of average payables and $400,000.00 cost of goods sold over 365 days, DPO is 41.06 days.

Method: Average accounts payable = (start + end) ÷ 2, or the end balance alone. DPO = average accounts payable × days in the period ÷ cost of goods sold. Accounts payable turnover = cost of goods sold ÷ average accounts payable, so DPO = days ÷ turnover.

  • Accounts payable and cost of goods sold cover the same period; the days are that period’s length.
  • Cost of goods sold stands in for credit purchases from suppliers; type purchases instead if you have them.
  • Every amount is at most $1 trillion, and cost of goods sold is at least $0.01.

Machine-readable copies: Markdown, JSON.

Worked examples

Each example is checked against the calculator on every build.

  1. Accounts payable at the end $3,300,000.00, Cost of goods sold $30,000,000.00, Days in the period 365 gives Days payable outstanding 40.15, Accounts payable turnover 9.090909, Average accounts payable $3,300,000.00.Source: OpenStax, Principles of Finance (Dahlquist and Knight, 2022), section 19.1: accounts payable turnover = cost of goods sold ÷ average accounts payable; payables deferral period = 365 ÷ turnover, https://openstax.org/books/principles-finance/pages/19-1-what-is-working-capital (scenario 2: turnover 9.09, 40.15 days)
  2. Accounts payable at the end $2,800,000.00, Cost of goods sold $30,000,000.00, Days in the period 365 gives Days payable outstanding 34.066667, Accounts payable turnover 10.714286.Source: OpenStax, Principles of Finance (Dahlquist and Knight, 2022), section 19.1: accounts payable turnover = cost of goods sold ÷ average accounts payable; payables deferral period = 365 ÷ turnover, https://openstax.org/books/principles-finance/pages/19-1-what-is-working-capital (scenario 1: turnover 10.71, about 34 days)
  3. Accounts payable at the start (optional) $40,000.00, Accounts payable at the end $50,000.00, Cost of goods sold $400,000.00, Days in the period 365 gives Average accounts payable $45,000.00, Days payable outstanding 41.0625, Accounts payable turnover 8.888889, Cost of goods sold per day $1,095.89.Source: OpenStax, Principles of Finance (Dahlquist and Knight, 2022), section 19.1: accounts payable turnover = cost of goods sold ÷ average accounts payable; payables deferral period = 365 ÷ turnover, https://openstax.org/books/principles-finance/pages/19-1-what-is-working-capital (average accounts payable = (beginning + ending) ÷ 2)
  4. Accounts payable at the end $45,000.00, Cost of goods sold $100,000.00, Days in the period 90 gives Days payable outstanding 40.5, Accounts payable turnover 2.222222, Cost of goods sold per day $1,111.11.Source: OpenStax, Principles of Finance (Dahlquist and Knight, 2022), section 19.1: accounts payable turnover = cost of goods sold ÷ average accounts payable; payables deferral period = 365 ÷ turnover, https://openstax.org/books/principles-finance/pages/19-1-what-is-working-capital (the period's days in place of 365)

How it works

  • Average accounts payable = (accounts payable at the start + accounts payable at the end) ÷ 2. With no start balance, the end balance is used alone.
  • Days payable outstanding (DPO) = average accounts payable × days in the period ÷ cost of goods sold.
  • Accounts payable turnover = cost of goods sold ÷ average accounts payable. DPO is the same as days in the period ÷ turnover.
  • Cost of goods sold per day = cost of goods sold ÷ days in the period.

OpenStax writes the payables days with 365 for a year. For a quarter or a month, use that period's days (90 or 91, 30 or 31) with that period's cost of goods sold.

Exact arithmetic. Every amount is read as the exact decimal you typed, and each result is worked out as an exact fraction, then rounded once for display.

Output format. DPO and turnover show 2 decimal places; money shows dollars and cents. Each is rounded half up from its exact value.

When there is no turnover. With $0 of average accounts payable, DPO is 0 days and the turnover is not shown (it would be infinite).

Assumptions

  • Accounts payable and cost of goods sold are for the same period, and the days are that period's length (1 to 366 days).
  • Cost of goods sold stands in for purchases on credit; type your credit purchases instead if you have them.
  • Cost of goods sold is at least $0.01; every amount is at most $1 trillion. Amounts so far apart in size that the turnover is beyond the largest number the page can hold give no answer.

Worked examples by hand

OpenStax's KSP Inc., $3,300,000 of average payables. Turnover = 30,000,000 ÷ 3,300,000 = 9.09 times; DPO = 3,300,000 × 365 ÷ 30,000,000 = 40.15 days.

The same company with $2,800,000 of payables. Turnover = 30,000,000 ÷ 2,800,000 = 10.71 times; DPO = 2,800,000 × 365 ÷ 30,000,000 = 34.07 days (OpenStax rounds this to 34 days).

Average of the start and end balances. Average = (40,000 + 50,000) ÷ 2 = $45,000; DPO = 45,000 × 365 ÷ 400,000 = 41.06 days; turnover = 400,000 ÷ 45,000 = 8.89 times; cost of goods sold per day = 400,000 ÷ 365 = $1,095.89.

One quarter. DPO = 45,000 × 90 ÷ 100,000 = 40.5 days; turnover = 100,000 ÷ 45,000 = 2.22 times in the quarter.

Other questions people ask

How do you calculate days payable outstanding?

DPO = average accounts payable × days in the period ÷ cost of goods sold. With $45,000 of payables and $400,000 cost of goods sold in a year: 45,000 × 365 ÷ 400,000 = 41.06 days.

What is the accounts payable turnover?

It is cost of goods sold ÷ average accounts payable: how many times in the period the business pays off what it owes suppliers. DPO is the days in the period ÷ the turnover, so a turnover of 9.09 in a year is 365 ÷ 9.09 = 40.15 days.

Should I use ending or average accounts payable?

The average of the start and end balances, (start + end) ÷ 2, evens out a balance that was unusually high or low on the last day. Leave the start balance empty to use the end balance alone, which is common for a quick check.

Why does DPO use cost of goods sold and not sales?

Suppliers bill at cost, so payables grow with what the business buys, not with what it charges customers. Cost of goods sold is the usual stand-in for purchases. If you know your credit purchases for the period, type them in the cost of goods sold box for a closer figure.

Is a higher DPO better?

A higher DPO keeps cash in the business longer, which shortens the cash conversion cycle. Paying later than the supplier’s terms can cost early-payment discounts and goodwill, and a DPO that keeps rising can be a sign the business is short of cash. Compare your DPO with your suppliers’ payment terms, such as 30 days.

How does DPO fit into the cash conversion cycle?

Cash conversion cycle = days of inventory + days of receivables − days payable outstanding. The days you take to pay suppliers are days you do not need to fund the inventory and receivables yourself.