DPO
Days Payable Outstanding
Short definition
DPO is the average number of days trade payables remain outstanding. It measures the tenor of supplier credit and hides early-payment discounts and supply risk in one number.
Detailed explanation
Purchases versus COGS in the denominator moves DPO; when inventory is building, purchases exceed COGS. Keep the VAT base aligned with receivables. Reverse factoring can reclass payables as bank debt and cut DPO, or leave them in the notes.
Stretching DPO shortens CCC and creates cash; suppliers may recoup it in price or shortages. Contract terms versus actual DPO is either a collection problem on their side or a deliberate delay on yours.
Why it matters for the CFO
Supplier credit is often the cheapest-looking short-term source. The hidden cost sits in price, quality and continuity. Banks can read a DPO bulge as hidden debt.
How it is calculated
DPO = (Ortalama ticari borç / Alışlar veya COGS) × Dönem gün sayısı
Variables in the formula
- DPO: Days payable outstanding
- AP: Average trade payables
- Purchases: Purchases (or COGS by policy)
How to read it
A DPO rise can be bargaining power or a cash squeeze; ageing and lost prompt-payment discounts separate them. There is no universal cap; sector and supplier concentration set it.
Numerical example
Average trade payables 40 mn TL, annual purchases 250 mn TL, 365 days → DPO = (40 / 250) × 365 ≈ 58 days.
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.