Days' payables outstanding (DPO), which tells how long a company takes to pay off its suppliers for the cost of inventory, is used to measure the operating cycle.

Question

Quizplus · Accepted Answer

DPO is a component of the cash conversion cycle, not the operating cycle. The operating cycle measures the time taken to convert inventory into cash, while DPO specifically measures the time taken to pay suppliers.

Days' Payables Outstanding (DPO), Which Tells How Long a Company