The Income|Outcome^® Contextuary

Ratio: Payables divided by the Average Daily COS

where Average Daily COS = (Annual COS/365)

Example: The Round Number Company COS = 80; Payables = 20 Average Daily COS = 80/365 = 0.22 Days Payable Outstanding = 20/0.22 = 91 Days

The ratio shows the company’s average payable period.

Days Payable Outstanding is part of the Cash Conversion Cycle.