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Days Payable Outstanding

   Also found in: Wikipedia 0.01 sec.
Days Payable Outstanding
The average amount of time it takes a company to pay its accounts payable. A company's accounts payable are short-term liabilities resulting from purchases the company has made on credit. Days payable outstanding is calculated thusly:

DPO = (accounts payable / cost of sales) * number of days.


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While there is obviously additional cost and administrative effort for the UK importer in providing this, the very fact it is putting forward a secure payment vehicle may enable the company to negotiate a marginal reduction in the unit price of the goods purchased, or increase their days payable outstanding, and thus their working capital position, by requesting additional credit terms on the strength of the LC.
Compared to the prior quarter, days sales outstanding (DSO) was down five days to 37 days, days payable outstanding (DPO) decreased by one day to 63 days and days of inventory outstanding (DIO) decreased by 11 days to 26.
With the usual sources of working capital availability constrained, customers will be trying to enhance liquidity through any means, including by stretching payables; over the same time frame, the average days payable outstanding for the hospital/surgical center index has already increased from 30 to 38.
 
 
 
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