This illustrated glossary uses Visual Finance™ to provide a contextualized 'big picture' view of financial results. The examples feature data for the Round Number Company—a 'made-up company' with simplified figures. The Appendix presents an explanation of how to read Visual Finance as well as the financial statements and VF views for the Round Number Company.
Ratio: Payables divided by the Average Daily COS
where Average Daily COS = (Annual COS/365)
Example: The Round Number CompanyCOS = 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.
The above is our generic explanations of common corporate financial terminology. Actual meanings can vary widely from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"
term list.