Days Payable Outstanding Calculator

Days payable outstanding is how long a company takes to pay its suppliers: average accounts payable divided by cost of goods sold, times the days in the period. On its own the number is unreadable, because ninety days looks like strength in one business and distress in another, so the second action puts it beside days sales outstanding and days inventory outstanding to give the cash conversion cycle and the cash tied up in it. A third action prices the decision that actually gets made, working out what forgoing an early settlement discount such as 2/10 net 30 costs as an annual rate and comparing it with your own cost of borrowing. Opening and closing payables are averaged where both are given, and the choice between cost of goods sold and credit purchases as the denominator is spelled out.