Measures the average number of days it takes for a company to pay its suppliers.
What it Measures ?
How many days we take to pay our suppliers.
Relevant StakeHolders
Procurement, Finance Team
In-depth Use Case / Real-world Example
DPO is calculated by dividing accounts payable by COGS, then multiplying by the number of days in the period. If a company has ₹150,000 in payables and ₹1,000,000 in COGS, DPO is 55 days. A higher DPO means a company is taking longer to pay its suppliers, which could indicate better cash management or potential supplier relationship issues.
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