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Cash & working capital
Days payable outstanding
The average number of days the business takes to pay its suppliers — how long payables are used as free financing.
Owned by: AnalystTest band: Analyst
The formula
DPO = Accounts payable ÷ COGS × Days in period
In practice
Stretching DPO funds growth for free, until suppliers notice. Match it to terms, not to the moment cash gets tight.
The kind of thing the test asks
- Stretching payment to suppliers from 30 to 45 days does what?
More in cash & working capital
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