Days of Payables Calculator

Formula

To calculate the Days of Payables ($DOP$):

\[ DOP = \frac{AP}{COGS} \times D \]

Where:

$DOP$ is the days of payables
$AP$ is the accounts payable in dollars
$COGS$ is the cost of goods sold in dollars
$D$ is the number of days in the period

What is Days of Payables?

Days of payables, also known as days payable outstanding (DPO), is a financial metric that indicates the average number of days a company takes to pay its suppliers. It is an important measure of a company’s liquidity and efficiency in managing its cash flow. A higher DPO indicates that a company is taking longer to pay its suppliers, which can be beneficial for cash flow management but may also strain supplier relationships. Conversely, a lower DPO suggests that a company is paying its suppliers more quickly, which can improve supplier relationships but may also impact cash flow.

Example Calculation 1

Let's assume the following values:

Accounts Payable ($AP$) = $50,000
Cost of Goods Sold ($COGS$) = $200,000
Number of Days ($D$) = 365

Using the formula:

\[ DOP = \frac{50,000}{200,000} \times 365 = 91.25 \]

The Days of Payables is 91.25 days.

Example Calculation 2

Let's assume the following values:

Accounts Payable ($AP$) = $30,000
Cost of Goods Sold ($COGS$) = $150,000
Number of Days ($D$) = 365

Using the formula:

\[ DOP = \frac{30,000}{150,000} \times 365 = 73 \]

The Days of Payables is 73 days.