How To Calculate DPO in Oracle EBS | Arithmix

Calculating DPO in Oracle EBS might seem like a daunting task, but it's actually quite simple once you understand the concept. DPO stands for Days Payable Outstanding, which is a financial metric used to measure how long it takes a company to pay its suppliers. This metric is important because it can give insight into a company's cash flow and financial health.

What Is DPO?

DPO is a measure of how long it takes a company to pay its suppliers. It is calculated by dividing the accounts payable by the cost of goods sold and multiplying the result by the number of days in the period being measured. The formula for DPO is:

DPO = (Accounts Payable / Cost of Goods Sold) x Number of Days

The result is the average number of days it takes a company to pay its suppliers. A lower DPO means that a company is paying its suppliers more quickly, while a higher DPO means that a company is taking longer to pay its suppliers.

When Is It Valuable To Calculate DPO?

Calculating DPO can be valuable for a number of reasons. For example, it can help a company to:

• Understand its cash flow: A low DPO can indicate that a company is paying its suppliers quickly, which can put a strain on its cash flow. A high DPO, on the other hand, can indicate that a company is holding onto its cash for longer, which can be beneficial for its financial health.
• Identify areas for improvement: If a company's DPO is higher than its industry average, it may be a sign that it needs to improve its payment processes or negotiate better terms with its suppliers.
• Monitor supplier relationships: A company's DPO can also be used to monitor its relationships with its suppliers. If a company is consistently paying its suppliers late, it may damage those relationships and make it harder to negotiate favorable terms in the future.

In conclusion, calculating DPO in Oracle EBS is a simple process that can provide valuable insights into a company's financial health and supplier relationships. By understanding the concept of DPO and its importance, companies can use this metric to make informed decisions and improve their overall financial performance.

How Do You Calculate DPO in Oracle EBS

Oracle EBS 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 Oracle EBS 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 Oracle EBS, 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 Oracle EBS 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 Oracle EBS 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.