How fast I pay suppliers. The Payables Turnover Calculator takes purchases (or cost of goods sold) for the period, payables at the start, payables at the end, days in the period and returns payables turnover plus days payable outstanding. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Financial ratios are only useful in comparison: against last year, against a competitor, or against the benchmark for your industry. Take the figures from the same set of accounts, note whether they are yearly or monthly, and read each ratio alongside the others in its family. Use the worked example below to check the maths against your own figures.
How the Payables Turnover Calculator works
How quickly you pay suppliers. A low turnover (high DPO) stretches your cash, but stretching beyond agreed terms costs goodwill and early-payment discounts.
Worked example
With the example values (purchases (or cost of goods sold) for the period of $800,000, payables at the start of $60,000, payables at the end of $80,000, days in the period of 365 days), the payables turnover is 11.43x; days payable outstanding 32 days. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is payables turnover calculated?
payables turnover = purchases ÷ average payables; DPO = days ÷ turnover.
Which figures do I need?
Purchases (or cost of goods sold) for the period, payables at the start, payables at the end, days in the period. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
What is a good value for this ratio?
Benchmarks differ by industry, size and business model, so compare with companies like yours and with your own history. A ratio moving in the wrong direction for several periods matters more than any single number.
