Days payable outstanding for a company with no COGS

CFA Level I FRA
#1

Hi all,

How do you calculate the days payable outstanding for an accounting firm that has no COGS?

Thanks

#2

what’s the whole problem?

generally, you can break down COGS like this if they’ve given you other pieces;

Beginning Inventory (at the beginning of the year) Plus Purchases and Other Costs. Minus Ending Inventory (at the end of the year) Equals Cost of Goods Sold.

#3

Right but there’s no inventory either.

I assumed COGS as the direct costs to generate profit - as this was an accounting firm I assumed external services & supplies + personnel costs

#4

If there’s no inventory, then what are the payables paying for?

#5

Pretty much external services & supplies

#6

Then use Purchases instead of COGS.