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Ask your modeling questions here! Feel free to copy/paste specific sections from filings as appropriate.

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How does one correctly calculate Days Payable Outstanding?

Full Question: I took your advanced financial modeling class yesterday and have a question for you regarding the DPO (Days Payable Outstanding) formula. The formula we used was AP * (365/total expenses). I thought DPO used COGS to calculate. How come we’re using total expenses instead? Is it some... Read More

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by Guest 1.

added 11 years ago

RE: How does one correctly calculate Days Payable Outstanding?

You are absolutely correct that the traditional formula for DPO uses COGS. However, that's straight from the textbooks and assumes that AP is trade payables. The vast majority of financials in 10Ks are presented with AP inclusive of trade payables as well as other acccrued expenses and liabilities a... Read More

by WST Expert 1.

added 11 years ago

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