How To Calculate DPO in Kinetic | Arithmix

DPO, or Days Payable Outstanding, is a financial metric that measures the average number of days a company takes to pay its suppliers. It is an important metric for businesses to track as it can provide insight into their financial health and management of cash flow. In this article, we will discuss how to calculate DPO in Kinetic, a popular accounting software.

What Is DPO?

DPO is a financial metric that measures the average number of days it takes a company to pay its suppliers. It is calculated by dividing the total accounts payable by the cost of goods sold per day. The result is the number of days it takes a company to pay its suppliers on average.

For example, if a company has $100,000 in accounts payable and a cost of goods sold of $10,000 per day, the DPO would be 10 days. This means that on average, the company takes 10 days to pay its suppliers.

When Is It Valuable To Calculate DPO?

Calculating DPO is valuable for businesses in several ways. Firstly, it can provide insight into a company's financial health. A high DPO can indicate that a company is taking longer to pay its suppliers, which may be a sign of financial distress or poor cash flow management. Conversely, a low DPO may indicate that a company is paying its suppliers quickly, which can be a positive sign for investors and creditors.

Additionally, DPO can be used to compare a company's payment practices to its industry peers. This can help businesses identify areas where they may need to improve their payment processes or negotiate better terms with their suppliers.

Finally, DPO can be used as a benchmark for future performance. By tracking DPO over time, businesses can monitor their progress in improving their payment practices and managing their cash flow.

In conclusion, calculating DPO is an important financial metric for businesses to track. By understanding how to calculate DPO in Kinetic, businesses can gain valuable insights into their financial health and cash flow management, compare their payment practices to their industry peers, and benchmark their performance over time.

How Do You Calculate DPO in Kinetic

Kinetic itself isn’t naturally geared towards letting you calculate complex metrics like DPO. As an alternative, teams typically use products like Arithmix to import data from Kinetic and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Kinetic, combine it with data from other systems, and create calculations like DPO.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating DPO in Arithmix

Calculating metrics like DPO is simple in Arithmix. Once you've created your free account, you’ll be able to import your Kinetic data, and use it to create natural language formulas for metrics like DPO.

Arithmix is designed to give you the power to build any calculations you want on top of your Kinetic data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.