Exercise

Days payable outstanding

We will now have a look at our accounts payable, or creditors, and a ratio called the Days Payable Outstanding (DPO).

This ratio is an efficiency ratio that measures the average number of days a company takes to pay its suppliers.

The DPO ratio is calculated as follows:

\(Days\,Payable\,Outstanding = \frac{Ending\,Balance\,Creditors}{Total\,Cost\,of\,Goods\,Sold} \times Days\,in\,Financial\,Year\)

T-Z wants to know its days payable outstanding and has asked you to calculate it.

The following is available in the workspace:

  • Total COGS for the period = 4000
  • Closing Payables balance = 650

Instructions

100 XP
  • Set the variables for cogs_tot and closing balance creditors creditors_end.
  • Calculate the Days Payable Outstanding dpo.
  • Print the dpo.