DPO: Difference between revisions
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imported>Doug Williamson (Add second definition.) |
imported>Baseby2@msn.com (Inclusion of calculation example and rationale of measure) |
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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. The DPO is: | |||
50,000/400,000*365 = 45.6 | |||
A higher number is perceived as better but a business need to maintain the goodwill of its suppliers and a shorter payment terms may be necessary. | |||
Also known as creditor days. | Also known as creditor days. | ||
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* [[Payables management]] | * [[Payables management]] | ||
[[Category:Context_of_treasury]] | |||
[[Category:Corporate_financial_management]] | |||
[[Category:Cash_management]] | [[Category:Cash_management]] | ||
[[Category:Technology]] | [[Category:Technology]] | ||
Revision as of 09:08, 21 November 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
A higher number is perceived as better but a business need to maintain the goodwill of its suppliers and a shorter payment terms may be necessary.
Also known as creditor days.
2.
Data Protection Officer.
