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

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Days' payables outstanding (DPO) is a key component in measuring the operating cycle, which calculates the time it takes for a company to convert its inventory into cash. DPO measures how long, on average, a company takes to pay off its suppliers for the cost of inventory, so it is an important factor in determining the operating cycle.

Days' Payables Outstanding (DPO), Which Tells How Long, on Average