Ataski
Start free

Financial metrics glossary

Days payable outstanding (DPO): definition, formula and example

Days payable outstanding (DPO) is the average number of days a company takes to pay its suppliers' bills. It is accounts payable divided by cost of goods sold for a period, multiplied by the number of days in that period.

Updated

Formula

  • DPO = Accounts payable ÷ Cost of goods sold in the period × Days in the period
  • Some companies divide by purchases in the period instead of cost of goods sold.

Worked example

Sample

SAMPLE · Northbridge Analytics, September 2026

Northbridge Analytics, the fictional software company in the Financial Analyst's public sample, at the end of September 2026. The month's cost of goods sold is annualised and the period is a year:

Line Amount
Accounts payable at month end $46,466
Cost of goods sold, September 2026 $44,002
Annualised cost of goods sold (× 12) $528,019
Days in the period 365
  1. DPO = $46,466 ÷ $528,019 × 365 = 32.1 days

Days payable outstanding: 32 days

The sample report prints DPO in whole days, next to days sales outstanding. Its largest supplier balance, $17,500 owed to Kestrel Dev Studio, is 37.7% of payables.

How to read it

  • A higher DPO keeps cash in the business longer: until the bill is paid, the supplier is in effect financing the goods or services. Compare DPO with the payment terms your suppliers give you.
  • Stretching DPO past the agreed terms is borrowing without asking. It can cost early-payment discounts, late fees and supplier goodwill, and it shows up as overdue bills in the payables aging.
  • Keep the denominator the same every time. When payables also hold bills for operating expenses — rent, software, professional fees — a DPO measured against cost of goods sold alone reads longer than suppliers actually wait.
  • Read DPO with days sales outstanding. When customers take longer to pay you than you take to pay suppliers, the gap is working capital the business has to fund.

How small US public companies compare (FY2025 10-Ks)

Median
70.8 days
Middle half
36.2 days to 131.2 days
Companies
376

All industries, from Ataski's study of the fiscal 2025 annual reports (Form 10-K) that non-accelerated filers with revenue of $1 million to $250 million filed with the SEC: half the companies are above the median and half below, and the middle half fall within the range shown. These are small public companies, not private businesses, so read the figures as a reference point rather than a target.

Days payable outstanding (DPO) by industry, with the method →

Source: Ataski analysis of SEC Financial Statement Data Sets (FY2025 10-K filings).

Where it shows up in the monthly management report

The report's “Cash and working capital” page shows payables with days payable outstanding next to receivables and days sales outstanding, and the working-capital timing gap — DSO minus DPO, in days. It also lists the suppliers with the largest balances, each with its share of payables.

The “Working capital and cycles” table prints DPO with DSO, days inventory outstanding and the cash conversion cycle, each with a line on what it means.

  • Open the sample workspace — a fictional company's books, worked by the Financial Analyst, with its monthly report. No signup.
  • The Financial Analyst — what it reads from your accounting system, what the report contains and what it costs.

Frequently asked questions

What is a good DPO?

Median 70.8 days (middle half 36.2–131.2 days), 376 companies, FY2025 10-Ks: the days payable outstanding (DPO) of small US public companies, with revenue of $1 million to $250 million and outside finance, insurance and real estate. A higher DPO keeps cash in the business longer, but only within the terms your suppliers agreed to: paying past them costs discounts, late fees and goodwill. Compare it with those terms.

Source: Ataski analysis of SEC Financial Statement Data Sets (FY2025 10-K filings)

What does a high DPO mean?

The company takes longer to pay its suppliers, which keeps cash in the business. It is healthy when it reflects terms the suppliers agreed to, and a warning sign when it comes from bills paid late.

What is the difference between DPO and DSO?

DSO measures how long customers take to pay you; DPO measures how long you take to pay suppliers. The cash conversion cycle combines them with days inventory outstanding: DSO plus DIO minus DPO.

Should DPO use cost of goods sold or purchases?

Either works if you use the same one every time. Purchases match payables more closely in a business whose stock levels change; cost of goods sold can be read straight from the P&L.

How can a business raise its DPO without harming suppliers?

Negotiate longer terms rather than paying late, pay on the due date rather than early unless there is a discount for paying early, and approve bills promptly so none slips past its terms.