Days Payable Outstanding (DPO) Calculator

Formulas

The formula used in the calculations is:

\[ \text{Average Accounts Payable} = \frac{\text{Beginning Accounts Payable} + \text{Ending Accounts Payable}}{2} \]

\[ \text{Purchases} = \text{Ending Inventory} - \text{Beginning Inventory} + \text{Cost of Goods Sold (COGS)} \]

\[ \text{DPO} = \left(\frac{\text{Average Accounts Payable}}{\text{Purchases}}\right) \times \text{Days in Accounting Period} \]

Description

This calculator computes the Days Payable Outstanding (DPO) based on the input values of beginning and ending accounts payable, beginning and ending inventory, cost of goods sold (COGS), and the days in the accounting period. DPO measures the average number of days that a company takes to pay its suppliers.

Example Calculation

Let's assume the following:

Beginning Accounts Payable: $150,000
Ending Accounts Payable: $200,000
Beginning Inventory: $200,000
Ending Inventory: $400,000
Cost of Goods Sold (COGS): $150,000
Days in Accounting Period: 365

Calculate the average accounts payable:

\[ \text{Average Accounts Payable} = \frac{150,000 + 200,000}{2} = 175,000 \]

Calculate the purchases:

\[ \text{Purchases} = 400,000 - 200,000 + 150,000 = 350,000 \]

Calculate the days payable outstanding (DPO):

\[ \text{DPO} = \left(\frac{175,000}{350,000}\right) \times 365 = 182.5 \text{ days} \]

Therefore, the DPO is 182.5 days.