Work out accounts payable turnover instantly with clear inputs, formula shown and shareable results.
Days payable outstanding measures how long you take to pay suppliers. It is free financing while it lasts, but stretching it past agreed terms costs goodwill, forfeits early-payment discounts and eventually shows up in the prices you are quoted.
Payables turnover
Turnover = Credit purchases / Average payables
DPO
DPO = Days in period / Payables turnover
Purchases is more accurate. COGS is an acceptable proxy when purchase data is unavailable and inventory is stable.
Only within terms. Beyond that it is unauthorised borrowing from suppliers and a common early warning sign of distress.