Definition: What is Days Payable Outstanding (DPO)?
Days payable outstanding (DPO) is the financial ratio. It is the average number of days which a company or business takes to pay invoices from suppliers and vendors.
On the annual or quarterly basis, this ratio is used to measure the efficiency of the managing of the company’s cash flow. Those companies which have a longer time to pay their cash have access to cash for a long period and do many tasks with that cash.
A company which has high DPO ratio can deploy company cash for the managing of different operations of the company. Such type of company can produce more products. Here you can also learn about Days Payable Outstanding Formula.
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