DPO: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Baseby2@msn.com (Inclusion of calculation example and rationale of measure) |
imported>Doug Williamson (Expand penultimate sentence of first definition.) |
||
| Line 9: | Line 9: | ||
50,000/400,000*365 = 45.6 | 50,000/400,000*365 = 45.6 | ||
A higher number is perceived as better but a business | |||
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. | Also known as creditor days. | ||
Revision as of 15:05, 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
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.
