Days Payable Outstanding

Days Payable Outstanding tells you the number of days it takes a company to pay it suppliers. Days Payable Outstanding is calculated as follows:
365 / (Credit Purchases from Suppliers / Average Accounts Payable)
This equation is equivalent to dividing 365 by the company's Accounts Payable Turnover Ratio.
Credit Purchases from Suppliers is equal to the company's Cost of Goods Sold minus Ending Inventory plus Beginning Inventory.
Some people calculate Days Payable Outstanding as follows:
365 / (Cost of Goods Sold / Average Accounts Payable)
However, the first equation listed above is more accurate.
When a company's Days Payable Outstanding increases over time, this suggests the company might be struggling to pay its suppliers. This indicates a worsening financial position for the company.-
Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education freely available to the world.
-
SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS:
• A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING
• A 44-PAGE GUIDE TO U.S. TAXATION
• A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS
• MANY MORE FREE PDF GUIDES AND SPREADSHEETS
* eepurl.com/dIaa5z
-
SUPPORT EDSPIRA ON PATREON
* / prof_mclaughlin
-
GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT
* edspira.thinki...
-
LISTEN TO THE SCHEME PODCAST
* Apple Podcasts: podcasts.apple...
* Spotify: open.spotify.c...
* Website: www.edspira.co...
-
GET TAX TIPS ON TIKTOK
* / prof_mclaughlin
-
ACCESS INDEX OF VIDEOS
* www.edspira.co...
-
CONNECT WITH EDSPIRA
* Facebook: / edspira
* Instagram: / edspiradotcom
* LinkedIn: / edspira
-
CONNECT WITH MICHAEL
* Twitter: / prof_mclaughlin
* LinkedIn: / prof-michael-mclaughlin
-
ABOUT EDSPIRA AND ITS CREATOR
* www.edspira.co...
* michaelmclaugh...

[@jenniferjones4792]

Is there a step skipped at the very end of getting to 42.7days? I get 85.4.

[@mohammedshammas9216]

Hi, is VAT included in COGS? or should we take it as COGS + VAT?

[@stangbien]

VAT does not go into the PnL so it is not included in the COGS

[@marzanahossain9316]

Do you have a video with partnerships ? If you please send me the link :) if not can you make a video ?