DPO: Difference between revisions
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imported>Doug Williamson (Expand penultimate sentence of first definition.) |
imported>Doug Williamson (Expand calculation.) |
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A working capital management ratio calculated by dividing accounts payable outstanding at the end of a time period by the average daily credit purchases for the period. | A working capital management ratio calculated by dividing accounts payable outstanding at the end of a time period by the average daily credit purchases for the period. | ||
For example: a company has an average of £50,000 of payables over a year in which the cost of goods sold was £400,000. | For example: a company has an average of £50,000 of payables over a year in which the cost of goods sold was £400,000. | ||
50,000/400,000*365 = 45.6 | The DPO is: | ||
50,000 / 400,000 * 365 = 45.6 days | |||
Revision as of 15:13, 1 December 2018
1.
Days Payables Outstanding.
A working capital management ratio calculated by dividing accounts payable outstanding at the end of a time period by the average daily credit purchases for the period.
For example: a company has an average of £50,000 of payables over a year in which the cost of goods sold was £400,000.
The DPO is:
50,000 / 400,000 * 365 = 45.6 days
A higher number is generally perceived as better, but a business needs to maintain the goodwill of its suppliers and a shorter payment terms may therefore be necessary.
Also known as creditor days.
2.
Data Protection Officer.
