DPO Calculator
If you want to determine how much a company takes time to pay its bills, you can use our DPO Calculator.
The DPO stands for days payables outstanding, which is used to estimate the period/time that the company takes to pay its bill. It is very useful in determining the efficiency and financial status of a company.
Table of Contents
Formula of DPO Calculator
After having all the above data, you can easily find the days' payables outstanding by using our DPO Calculator or by using the formula listed below:
DPO = (average accounts payable / purchases) * days in accounting period
There is some essential factor you must have to consider to find out the company's DPO. These factors (listed below) assist you in finding the days' payables outstanding.
Average accounts payable
The short-term debt or liabilities a company has to pay to its suppliers and creditors is considered average accounts payable. To calculate the average accounts payables, you can use the formula listed below:
Average accounts payable = (beginning accounts payable + ending accounts payable) / 2
Purchases
The inventory that a company buys from its distributor in a particular year is the value of purchases. To find out the purchase value of a company, you can use the formula listed below.
Purchases = ending inventory - beginning inventory + cost of goods sold
Days in the company's accounting period
An accounting period is the entire financial year of a company containing 365 days.
Note:
To calculate PITI, you can use our PITI Calculator.
Example
For a better understanding of concepts, let us have an example below:
Suppose an ABC company wants to determine the day's payables outstanding after completing its first accounting period, whereas, the average accounts payable of a company is $175,000 and purchases a company made in a year are $350,000.
Given data
Average accounts payable= $175,000
Purchases= $350,000
To Find
DPO = Days Payables Outstanding = ?
Solution
By using the formula listed below, we will find out the value of DPO:
DPO = (average accounts payable / purchases) * days in accounting period
Putting values in the formula:
DPO = ($175,000 / $350,000) * 365 = 182.5 days
How to use the DPO Calculator?
The steps to use the DPO calculator are as follows:
Step 1: Enter the values in the required inputs.
Step 2: The calculator will automatically display an answer on the screen.
Calculator Use
To find out the value of days payables outstanding of vendors, financiers, or suppliers, you can use our tool.
