Days Payable Outstanding (DPO)
Definition
The average number of days a business takes to pay its suppliers, calculated as average accounts payable divided by cost of sales, times the days in the period. Stretching DPO funds working capital but risks supplier relationships and early-payment discounts.
Related Terms in Financial Analysis
Days Sales Outstanding (DSO)
The average number of days taken to collect payment after a sale, calculated as average accounts receivable divided by revenue, times the days in the period. Rising DSO is usually the earliest warning of a cash-flow problem.
Job Costing
Assigning materials, labour and overhead to a specific job, project or contract so profitability can be read per job rather than only in aggregate. Standard practice in construction, agencies, manufacturing to order and professional services.
Purchase Price Variance (PPV)
The difference between the price actually paid for a purchase and the standard or expected price, times the quantity bought. A persistent unfavourable variance points at supplier pricing, buying practice, or an out-of-date standard cost.
Current Ratio
Current assets divided by current liabilities, a measure of whether a business can meet obligations falling due within a year. Above 1 means current assets cover current liabilities; what counts as healthy varies sharply by industry.
Stop memorising terms — let HelloBooks do the work
AI-assisted bookkeeping that handles invoicing, GST, reconciliations, and reports automatically. Free to start.