14. Financial Statement Analysis
Ratios: Days Payable Outstanding (DPO)
객관식
ABC Company had \$200,000 in Net Sales and Gross Profit of \$80,000. If AP had a balance of \$60,000, what is the DPO ratio?
A
274 days
B
182 days
C
110 days
D
Not enough information
검증된 단계별 안내1
Understand the problem: We need to calculate the Days Payable Outstanding (DPO) ratio, which measures the average number of days a company takes to pay its accounts payable (AP).
Identify the formula for DPO: DPO = (Accounts Payable / Cost of Goods Sold) * Number of Days in Period.
Calculate the Cost of Goods Sold (COGS): Use the formula COGS = Net Sales - Gross Profit. Here, Net Sales = \$200,000 and Gross Profit = \$80,000.
Substitute the values into the DPO formula: Use the calculated COGS, the given Accounts Payable balance of \$60,000, and assume a 365-day year for the number of days in the period.
Solve the equation to find the DPO ratio, which will give you the average number of days the company takes to pay its suppliers.
