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FinShare Overview      |      Bank Payment Obligation (BPO)      |      Supplier Finance (Reverse Factoring)      |      Receivables Finance      |     
 
Purchase Order Financing      |      Factoring      |      Asset Based Lending (ABL)      |      Risk Participation      |      Document Preparation (DocPrep)
 

 
WHAT IS DPO, DSO, DIO
 
Days Payable Outstanding (DPO)
 
While we want customers to pay us quickly, we want to take our time paying our bills.  By paying the suppliers slowly, cash is available to spend on things we need, like inventory, so we want this number to be higher.  DPO = 365 days / (cost of goods sold/average accounts payable).
 
Days Sales Outstanding (DSO)
 
Outstanding sales are those the company hasn't yet been paid for; they're languishing in accounts receivable.  We want our companies to not only make quick sales, but also get paid for them right away.  The faster the better.  DSO = 365 days / (sales/average accounts receivable).
 
Days Inventory Outstanding (DIO)
 
Inventory sitting on store shelves or in stockrooms is not doing the company, or the investor, any good.  The number of days the inventory sits there measures how quickly management can get those products off the shelves and into the stores or to the consumers.  Obviously the lower the numbers the better.  DIO = 365 days / (cost of goods sold/average inventory). 
 

 
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