What is days payable outstanding (DPO)?

Days payable outstanding (DPO) is the average number of days a business takes to pay its suppliers. Divide average accounts payable by cost of goods sold for the period and multiply by the days in it: $400,000 of average payables against $4.8 million of annual cost of goods sold gives 30.4 days.

Days Payable Outstanding (DPO): Formula, Examples

The days payable outstanding formula

DPO = average accounts payable ÷ cost of goods sold × days in the period. Take both figures for the same dates: accounts payable from the balance sheet at the start and end of the period, cost of goods sold from the profit and loss report.

Inputs to the DPO formula
Input	Where to find it	Notes
Average accounts payable	Balance sheet: (opening AP + closing AP) ÷ 2	Trade payables only; leave out accrued payroll and taxes
Cost of goods sold	Profit and loss for the same period	Service businesses often use purchases or operating expenses instead; stay consistent
Days in the period	365 a year, about 91 a quarter, 30 a month	Match the days to the cost of goods sold period

Before you rely on the result, check that the accounts payable balance on the balance sheet equals the total of the AP aging report on the same date. A bill posted to the wrong account or an unreversed accrual will distort DPO.

Worked example: calculating DPO for a year and a quarter

A distributor starts the year with $380,000 of payables, ends it with $420,000, and records $4,800,000 of cost of goods sold. Its DPO is 30.4 days.

1
Average the payables
($380,000 + $420,000) ÷ 2 = $400,000.
2
Divide by cost of goods sold
$400,000 ÷ $4,800,000 = 0.0833.
3
Multiply by the days
0.0833 × 365 = 30.4 days.
4
Repeat for a quarter
In the fourth quarter, average payables were $455,000 and cost of goods sold was $1,260,000: $455,000 ÷ $1,260,000 × 91 = 32.9 days.

The quarter runs a few days longer than the year. Before celebrating, check why: if suppliers agreed longer terms, fine; if bills sat waiting for approval past their due dates, the extra days are late payments. Illustrative numbers.

DPO from real 10-K filings

The same formula applied to four companies’ latest annual reports shows how widely DPO varies, even between large, well-run businesses.

DPO for four US-listed companies
Company	Average AP	Cost of revenue	DPO
Walmart (WMT), year to 2026-01-31	$60.9bn	$535.4bn	41.5 days
Home Depot (HD), year to 2026-02-01	$11.7bn	$109.8bn	38.9 days
Caterpillar (CAT), year to 2025-12-31	$8.3bn	$44.8bn	67.9 days
Quanta Services (PWR), year to 2025-12-31	$2.5bn	$24.2bn	37.2 days

Average of opening and closing accounts payable ÷ cost of revenue × 365, from SEC EDGAR XBRL data retrieved 2026-10-23. Each filing is linked on our DPO by industry research page.

Days payable outstanding benchmarks by industry

DPO depends heavily on industry. Across the 56 companies in our 10-K sample the median is 58 days; APQC puts the cross-industry median around 40 days, and J.P. Morgan reports 51.2 days for S&P 1500 companies in 2023.

Median DPO by industry, from 10-K filings
Industry	Companies	Median DPO	Middle half (25th to 75th percentile)
Construction and engineering	8	35 days	33 to 38 days
Wholesale distribution	8	35 days	28 to 57 days
Retail	8	45 days	37 to 56 days
Industrial machinery	8	63 days	53 to 67 days
Chemicals	8	67 days	63 to 72 days
Apparel and footwear	8	76 days	63 to 98 days
Packaged food and beverage	8	95 days	67 to 112 days

Aequo calculation from SEC EDGAR XBRL company facts, retrieved 2026-10-23; a small named sample of large US-listed companies, not a survey. Smaller private companies often pay faster. Method, every company and a CSV: /research/days-payable-outstanding-by-industry.

APQC: median DPO around 40 days across industries, about 30 days at the 25th percentile and about 50 days at the 75th (2024, published via CFO.com).
J.P. Morgan Working Capital Index 2024: S&P 1500 companies averaged 51.2 days in 2023, up from 48.5 days in 2022.

Read the full method in DPO by industry (2026).

What a high or low DPO tells you

A high DPO keeps cash in the business longer; a low DPO means suppliers are paid quickly. Whether either is healthy depends on the terms you agreed and why the number moved.

Reading DPO
Signal	Possible good reason	Possible problem
DPO above agreed terms	Suppliers agreed extended terms after the period started	Bills paid late: late fees, credit holds, lost goodwill
DPO below agreed terms	You take early-payment discounts that beat your cost of cash	Paying early by habit, with no discount, and using cash you need
DPO rising each quarter	Longer terms negotiated with large suppliers	An approval backlog: invoices waiting past due date
DPO falling each quarter	More suppliers on discount terms	Supplier pressure or a change to prepayment

How to raise DPO without hurting suppliers

Pay on the due date rather than early, negotiate longer terms openly, and take early-payment discounts only when they beat your cost of cash. Do not raise DPO by paying late.

Pay to terms, not on receipt. Schedule each bill for its due date. Many small teams pay as soon as a bill is approved, which lowers DPO for no benefit.
Negotiate terms, then record them. Move key suppliers from net 30 to net 45 or net 60 by agreement, and update the terms in your accounting system so due dates are right.
Price early-payment discounts. Skipping 2/10 net 30 costs about 37.2% a year (2 ÷ 98 × 365 ÷ 20). If your cost of cash is lower, take the discount even though DPO falls. See what 2/10 net 30 means.
Clear approvals before the due date. Late approvals push payments past terms; that raises DPO in the worst way. See invoice approval routing.
Watch it next to supplier terms. Track DPO with on-time payment rate, so a higher DPO is never hiding late payment.

DPO in the cash conversion cycle

The cash conversion cycle is days inventory outstanding plus days sales outstanding minus days payable outstanding. Every extra day of DPO shortens the cycle by a day, so payables are one of three levers on working capital.

Example: 45 days of inventory, 38 days to collect from customers and a DPO of 30 gives a 53-day cycle (45 + 38 − 30). Agreeing 45-day terms with suppliers, and paying on day 45, cuts it to 38 days. For the receivables side, see accounts payable vs accounts receivable.

Frequently asked questions

What does days payable outstanding mean?

Days payable outstanding means the average number of days between receiving a supplier’s goods or services (and the bill) and paying for them. A DPO of 40 means the business pays its suppliers, on average, 40 days after the cost is recorded.

What is the formula for days payable outstanding?

DPO = average accounts payable ÷ cost of goods sold × number of days in the period. Average accounts payable is usually (opening AP + closing AP) ÷ 2. Use 365 days for a year, about 91 for a quarter and 30 for a month, with cost of goods sold for the same period.

Is a higher DPO good or bad?

Neither on its own. A higher DPO keeps cash in the business longer, but if it comes from paying late rather than from longer agreed terms it costs early-payment discounts, late fees and supplier goodwill. Compare DPO with your agreed payment terms: a DPO well above terms usually means late payment.

What is a good days payable outstanding?

There is no single target. APQC puts the cross-industry median around 40 days, J.P. Morgan’s Working Capital Index puts S&P 1500 companies at 51.2 days for 2023, and the median of the 56 10-K filings in our sample is 58 days. A good DPO is close to your agreed supplier terms and stable from period to period.

What is the difference between DPO and DSO?

DPO measures how long you take to pay suppliers; days sales outstanding (DSO) measures how long customers take to pay you. Both feed the cash conversion cycle: DSO + days inventory outstanding − DPO.

Can I calculate DPO with ending accounts payable?

Yes, and some analysts do, but a single large bill posted on the last day can swing the result. Average AP across the period is steadier. Whichever you choose, use it every period so the trend is comparable.

How is DPO related to the accounts payable turnover ratio?

They are two views of the same numbers. AP turnover = cost of goods sold (or purchases) ÷ average AP, and DPO = days in the period ÷ AP turnover. A turnover of 12 a year is a DPO of about 30 days.

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Sources

Checked on October 30, 2026. Vendor capabilities and prices change; confirm current details with each vendor.

APQC, via CFO.com Metric of the Month: Manage Days Payable Outstanding to Improve Cash Flow — median DPO around 40 days; about 30 at the 25th and 50 at the 75th percentile
J.P. Morgan, Increasing Efficiency: Working Capital Index 2024 — S&P 1500 DPO 51.2 days in 2023, 48.5 in 2022
U.S. Securities and Exchange Commission, EDGAR Application Programming Interfaces (XBRL companyfacts) — accounts payable and cost of revenue for 56 US-listed companies, retrieved 2026-10-23