Average number of days a company takes to pay its suppliers. High DPO can indicate strong bargaining power; excessively high values may signal strained supplier relationships.
Formula: DPO = (Trade Payables / COGS) × 365
How to read it: 30–60 days is typical for most industries. Retail giants (Walmart, Amazon) often exceed 90 days, using supplier credit as an interest-free source of funding.
Days Payable Outstanding is a key component of the Cash Conversion Cycle. Together with DSO and DIO, it reveals the full cash flow timing of a business.