Read the formula and its variables
The purchase convention, average balance and period day count must match.
| Input | Meaning |
|---|---|
| n | Days in the period |
| Average AP | Average trade payables |
| P | Positive purchases base |
Inspect a stated example
At 365 days, payables 30 and purchases 360 give 30.4167 days.
The illustrative inputs are not an actual issuer’s data. Match balance coverage, flow period and units before applying the formula.
Keep the conclusion within the evidence
An average DPO is different from the contractual deadline for a specific supplier invoice.
A ratio change can motivate a further question. It does not automatically identify the transaction, risk or operational outcome that produced it.