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
This exercise is part of the course
Financial Forecasting in Python
Exercise instructions
- Set the variables for
cogs_totand closing balance creditorscreditors_end. - Calculate the Days Payable Outstanding
dpo. - Print the
dpo.
Hands-on interactive exercise
Have a go at this exercise by completing this sample code.
# Get the variables
cogs_tot = ____
____ = 650
# Calculate the days payable outstanding
____ = (____/____)*365
# Print the days payable outstanding
print("The days payable outstanding is {}.".format(dpo))