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Business finance / Days Payable Outstanding (DPO) Calculator

Days Payable Outstanding (DPO) Calculator

US benchmarks · checked 20 Oct 2026
Accounts payable
$

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$

Enter a number of at least 0

$

Enter a number of at least 0

From the income statement for the same period.

Whole number, 1–366

365 for a year, 90 for a quarter.

For supplier terms like 2/10 net 30: 2% off if you pay within 10 days, otherwise the full bill is due in 30.

Supplier terms
%

Enter a number from 0 to 50%

Whole number, 0–179

Whole number, 1–180

$

Enter a number of at least 0

Example figure. Enter what you buy each year from suppliers who offer the discount.

%

Enter a number from 0 to 100%

Example figure. Use the rate on your own credit line or card, the cost of paying early with borrowed money.

Days payable outstanding (DPO)
28.4 days
12.86×payables turnover
37.2%skipping 2/10 net 30, as a yearly rate
$12,329cash kept by paying 10 days later
Average accounts payable · (start + end) ÷ 2$35,000.00
Cost of goods sold$450,000.00
Days payable outstanding · payables ÷ COGS × 36528.4 days
Payables turnover · COGS ÷ payables12.86×
Average daily COGS$1,232.88
Skipping 2/10 net 30, as a yearly rate · 2.0% ÷ (1 − 2.0%) × 365 ÷ 20 days37.24%
Discounts earned by paying early$2,400.00
Interest to borrow for 20 more days · at 12% a year$773.26
Net gain from taking the discount$1,626.74

Skipping the discount is like borrowing at 37.2% a year. At 12% it pays to borrow and pay by day 10: a net gain of $1,626.74 a year.

See breakdown

How the days payable outstanding (DPO) calculation works

Work out how many days you take to pay suppliers, and whether an early-payment discount like 2/10 net 30 is worth more than holding on to the cash.

  1. Average your payables

    Add accounts payable at the start and end of the period and halve it. $30,000 and $40,000 give $35,000.

  2. Divide by COGS and multiply by days

    $35,000 ÷ $450,000 of cost of goods sold × 365 = 28.4 days. That is your DPO. Some analysts divide by purchases instead; use the same method every period.

  3. Price the early-payment discount

    On 2/10 net 30 terms, skipping the 2% to keep your cash 20 more days costs 2 ÷ 98 × 365 ÷ 20 = 37.24% a year.

  4. Compare with your borrowing rate

    If you can borrow for less than that rate, take the discount. On $120,000 of bills, 2% saves $2,400 and 20 days of 12% interest costs $773.26, a net gain of $1,626.74.

Worked example. A small distributor owed suppliers $30,000 at the start of the year and $40,000 at the end, on $450,000 of cost of goods sold. Average payables are $35,000, so DPO is 35,000 ÷ 450,000 × 365 = 28.4 days and payables turnover is 12.86 times. One supplier offers 2/10 net 30 on $120,000 a year of bills. Skipping that discount costs 37.24% a year. Paying by day 10 with money from a 12% credit line earns $2,400 of discounts for $773.26 of interest, a net gain of $1,626.74.

Days Payable Outstanding FAQ

What is the days payable outstanding formula?

DPO = average accounts payable ÷ cost of goods sold × days in the period. With $35,000 of average payables and $450,000 of COGS over 365 days, DPO is 28.4 days. Average payables are usually (start + end) ÷ 2.

How do I calculate days payable outstanding?

Take accounts payable from the balance sheet at the start and end of the period, average them, divide by cost of goods sold for the same period, and multiply by the number of days (365 for a year, 90 for a quarter). The calculator does each step and shows the working.

Should I use COGS or purchases for DPO?

COGS is the common choice because it is on the income statement. Purchases match payables more closely, because payables come from what you bought, not what you sold. Purchases = COGS + ending inventory − beginning inventory. With $470,000 of purchases instead of $450,000 of COGS, DPO falls from 28.4 to 27.2 days. Pick one and use it every period.

What is a good days payable outstanding?

From NYU Stern (Damodaran) data for US listed companies, January 2026, payables equal about 63 days of cost of goods sold across all non-financial firms. By sector it is about 23 days for trucking, 26 for restaurants, 29 for grocers, 37 for business and consumer services, 43 for engineering and construction, 55 for distributors and 65 for general retailers. These use year-end payables and each sector's gross margin to put payables on a cost basis. Large companies can push suppliers harder than a small business can, so the terms on your own invoices matter more.

Is a high DPO good or bad?

A higher DPO means suppliers finance more of your stock and work, which helps cash flow. Too high can mean you are paying late, which costs you late fees, early-payment discounts and supplier goodwill. Compare DPO with the terms you agreed: a DPO of 45 on net 30 terms means bills are paid about 15 days late on average.

What does 2/10 net 30 cost if I don't take the discount?

Skipping it costs about 37.24% a year: you give up 2% to keep 98% of the bill for 20 more days, and 2 ÷ 98 × 365 ÷ 20 = 37.24%. 1/10 net 30 works out to 18.43%. If your credit line costs less than that, paying early with borrowed money still saves money.

What is payables turnover, and how does it relate to DPO?

Payables turnover = COGS ÷ average accounts payable: how many times a year you pay off your payables. DPO is the same thing in days: days in the period ÷ turnover. $450,000 ÷ $35,000 = 12.86 times, and 365 ÷ 12.86 = 28.4 days.

How does DPO fit into the cash conversion cycle?

Cash conversion cycle = days inventory outstanding + days sales outstanding − DPO. Each extra day of supplier credit shortens the cycle by a day. With $450,000 of yearly COGS, one day is about $1,233 of cash, so paying 10 days later keeps about $12,329 in your account.

Sources: NYU Stern (Damodaran): Working capital ratios by sector, US, January 2026 · NYU Stern (Damodaran): Margins by sector, US, January 2026

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