Days Payable Outstanding (DPO)
The average number of days a company takes to pay its suppliers.
What is DPO?
Days Payable Outstanding (DPO) measures the average time, in days, that a company takes to pay its trade creditors. It equals 365 divided by the Payables Turnover Ratio (COGS divided by average accounts payable). A higher DPO means the company holds onto cash longer before paying suppliers, which improves short-term liquidity — large companies often negotiate extended payment terms as a competitive advantage. A very high DPO may signal cash flow stress or strained supplier relationships.
Formula
DPO = 365 ÷ Payables Turnover Ratio
Worked Example
Worked example — Apple Inc. (AAPL)
FY2024
Step 1 Payables turnover: COGS $210,352M ÷ avg AP ($68,960M + $62,611M) ÷ 2 = 3.20x
Step 2 DPO = 365 ÷ 3.20 = 114.06 days
Step 3 → Apple pays suppliers on average 114 days after receiving goods — a major competitive advantage
Source: Apple 10-K FY2024 (2024-11-01)
Calculate DPO
COGS divided by average accounts payable (e.g. 3.20 if COGS=$210B and avg AP=$65.8B)
Days Payable Outstanding
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Not investment advice.
How to Interpret DPO
< 30
Low — fast payment, may reflect weak bargaining power
30 – 60
Average — standard payment terms
60 – 90
High — extended terms, strong supplier relationships
> 90
Very High — dominant buyer or potential cash flow stress