Result
DPO
—
Your inputs are stored in this browser, so everything is still here next time. Nothing is sent to a server.
This calculation is for informational purposes only and does not replace advice from a qualified professional. Formulas and rates may not fit your exact situation — double-check the figures before making decisions.
How it is calculated
DPO = accounts payable ÷ cost of goods sold for the period × number of days in the period. It shows how many days on average pass between a purchase and actually paying the supplier.
A higher DPO means the business uses supplier money as a free source of working capital financing for longer — that reduces the need for its own cash or borrowing. But stretching payment terms too aggressively risks damaging supplier relationships and losing early-payment discounts, which are often worth more than the cost of money saved by delaying payment.
DPO is one of three components of the Cash Conversion Cycle, alongside DSO (receivables) and DIO (inventory). In the formula CCC = DIO + DSO − DPO, DPO is the only component that shortens the cycle rather than lengthening it.