How do you find days payable outstanding?
Indicates how the firm handles obligations of its suppliers. · Formula Ending Accounts Payable
Purchases / 365
There are three parts to a firm's cash conversion cycle. The formula is: Inventory Days on Hand + Average Collection Period - Days Payable Outstanding = Cash Conversion Cycle Each part split up: Inventory Days on Hand = Inventory / Daily Cost of Goods Sold (COGS) Average Collection Period = Accounts Receivable / Daily Sales Days Payable Outstanding = Accounts Payable / Daily COGS If the first two parts are reduced by one day, the…