Days payable outstanding

How long the company takes to pay its suppliers, measured as payables divided by cost of goods sold, multiplied by 365.

The distributor with ₹540 crore of payables on ₹3,900 crore of purchases pays in about 51 days.

A lengthening figure is ambiguous in a way the other two working capital measures are not. It can mean the company gained scale and negotiated better terms, which is a genuine improvement. It can equally mean the company is short of cash and paying late, which is the beginning of a supply problem. The two look identical in the ratio and different in the notes, where trade payables to micro and small enterprises are disclosed separately in Indian accounts, along with any interest payable on overdue amounts.

That disclosure is where late payment becomes visible.