days payable outstanding

Intermediate 💰 Finance / Accounting

Definition

The average number of days a company takes to pay its suppliers, calculated by dividing accounts payable by daily cost of goods sold. Low numbers mean you're a prompt payer; high numbers mean you're using suppliers as a free bank.

Example Usage

The retailer stretched days payable outstanding to 90 days, essentially financing operations on suppliers' backs.

Origin

Working capital management metric that emerged alongside accounts receivable analysis in 20th century

Fun Fact

Large companies often have DPO of 60-90 days while small suppliers operate on 30-day terms, creating a systematic cash flow advantage for big players.

Source: Working capital and cash flow analysis

Related Terms

Intermediate

internal rate of return

The discount rate that makes the net present value of an investment zero—basically the breakeven return that justifies the project. If IRR exceeds your hurdle rate, it's theoretically a go; if not, it's a hard pass.

💰 Finance / Accounting
Intermediate

quick ratio

Current assets minus inventory divided by current liabilities—also called the 'acid test' because it measures whether you can pay bills without selling inventory. It's liquidity measurement for pessimists who assume everything in the warehouse is unsellable.

💰 Finance / Accounting
Beginner

footnote disclosure

Additional information buried in the tiny print at the end of financial statements, where companies hide things they're legally required to disclose but hope nobody reads. It's where the interesting stuff actually lives.

💰 Finance / Accounting
Advanced

cookie jar reserves

Reserves that companies stash away during good times to smooth out earnings during bad quarters, like a financial rainy day fund that violates accounting principles. It's earnings management dressed up in respectable terminology.

💰 Finance / Accounting
Intermediate

rollover risk

The danger that you won't be able to refinance maturing debt or will only be able to do so at punishing rates. The financial equivalent of your credit card's intro rate expiring at the worst possible moment.

💰 Finance / Accounting
Beginner

sunk cost

Money already spent that cannot be recovered and therefore should not factor into future decisions, though humans are psychologically terrible at ignoring it. Your brain keeps asking 'but what about the money we already spent?' and economics keeps answering 'it's gone, move on.'

💰 Finance / Accounting

Translate This Term

See “days payable outstanding” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.

Try the Translator

Share This Term

Post on XShare on FacebookShare on LinkedIn

Discover a Term

Beginner

WOD

Workout Of the Day - a pre-programmed training session, most associated with CrossFit. The mysterious ritual that determ...