DPO: Difference between revisions

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imported>Doug Williamson
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imported>Doug Williamson
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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:
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.


See also