Differentiation between Ratios?
Are these ratios different from each other
DIO vs Number of Days of Inventory
DPO vs Number of Days of Payables
DRO vs Number of Days of Recievables
There is differences in their core formulas , so are they actually different from eachother?
1 answers ( 0 marked as helpful)
Hi Dhruv,
Yes, they are different as they show you different things.
DIO shows you how much on average you keep goods on inventory
DPO shows you how much on average it takes to pay suppliers
DRO (also known as DSO) shows you how much on average it takes to receive money from clients.
Hope this makes sense!
Best,
Ned