All 21 Aging Analysis questions
More in Aging Analysis
How do you read an AR aging summary at a glance? What does it mean when receivables are 'current' versus 'past due'? What is a weighted-average days overdue and why is it useful? How is Days Sales Outstanding (DSO) calculated and what does it indicate? What is the cash conversion cycle and how do AR/AP aging feed it? How is aging used to prioritize collections activity? How do you reconcile the aging report to the general ledger control account? What red flags can an aging report reveal? What is 'best possible DSO' and how does it differ from standard DSO? How does disputed AR distort aging and what should you do about it?
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Accounts Payable & Receivable › Aging Analysis

What is Days Payable Outstanding (DPO) and how does it relate to aging?

Intermediate

Answer

DPO is the average days you take to pay suppliers: (Accounts Payable / COGS) x days. AP aging is the detail behind DPO—showing how far outstanding payables are. Higher DPO preserves cash but risks supplier relations and missed discounts; aging shows whether you're paying on time, early, or late.
DPO = (AP / COGS) x 365 = (500,000 / 5,000,000) x 365 ~= 36.5 days.
Real-world example Management targets a 45-day DPO; the AP aging confirms most invoices are paid near, not before, their due date.

Common follow-ups: How do DPO and DSO affect the cash conversion cycle? | Can DPO be too high?

Payment Runs Credit Control Aging Analysis
All 21 Aging Analysis questions