Lesson Plan

• Describe what trade payables turnover and days payable outstanding (DPO) measure.
• Calculate average trade payables, turnover and DPO from published accounts.
• Interpret DPO values in terms of cash‑flow management and supplier relationships.
• Identify common calculation errors and explain how to avoid them.
• Apply the ratio to exam‑style questions, showing full workings and assumptions.

• Projector and screen
• Whiteboard and markers
• Calculators (or calculator apps)
• Printed worksheet with company data and formula sheet
• Sample published accounts handout (Company XYZ)
• Sticky notes for exit ticket

Begin with a quick question: “What happens to a business’s cash flow if it delays paying suppliers?” Connect this to the previous lesson on efficiency ratios. Explain that today’s success criteria are to calculate the turnover and DPO correctly and to interpret the results in a business context.

1. Do‑now (5') – short quiz on inventory turnover; students submit answers on sticky notes.
2. Mini‑lecture (10') – introduce trade payables turnover and DPO, display formulas and key concepts.
3. Guided practice (15') – walk through the worked example from Company XYZ, filling each calculation step on the board.
4. Independent activity (15') – students use the worksheet to calculate DPO for a new company, then compare answers with a partner.
5. Interpretation discussion (10') – groups discuss what a high or low DPO indicates for cash flow and supplier relations, referencing industry benchmarks.
6. Exam‑tip recap (5') – highlight common pitfalls, marking points and the importance of showing assumptions.

Summarise the calculation steps and the business implications of DPO values. Ask each student to write one key takeaway on a sticky note as an exit ticket. For homework, assign a past‑paper question requiring the calculation and interpretation of trade payables turnover.