accounts payable turnover ratio , Managerial Accounting

Assignment Help:

 

Accounts Payable Turnover Ratio is a short-term liquidity measure which is used to calculate the rate at which a company pays off its suppliers. Accounts payable turnover ratio is computed by taking the total purchases done by suppliers and dividing it by the average accounts payable amount during the similar period.

2156_accounts payable turnover formula.png

The measure explains investors how many times per period the company pays its average payable amount. For instance, if the company makes $100 million in purchases from suppliers in a given year and at any given point owns an average accounts payable of $20 million then the accounts payable turnover ratio for the given period is 5 ($100 million/$20 million). If the turnover ratio is reducing from one period to another, this is a signal that the company is taking long time to pay off its suppliers than it was earlier. The opposite is true when the turnover ratio is rising, which shows that the company is paying of suppliers at a quicker rate.

 

 

 


Related Discussions:- accounts payable turnover ratio

cost per equivalent unit was determined , The Ragan Corporation uses a pro...

The Ragan Corporation uses a process cost system. The company started March with 2,300 units in Work in Process-Dept. A. During the month 4,000 units were started. At the end of th

Compute the effect of relaxing credit effort on net profit, M/s ABC is seei...

M/s ABC is seeing relaxing its collection efforts. At current its sales are as Rs.40 lakhs, the ACP is here 20 days and variable cost to sales ratio is .8 and bad debts are as .05

Determine the cash flow budget - monthly cash disbursement, where can I get...

where can I get the solution for the question on this link: http://www.expertsmind.com/questions/determine-the-cash-flow-budget-monthly-cash-disbursement-30145416.aspx I have att

Which of the following costs is an example of a cost, Which of the followin...

Which of the following costs is an example of a cost that remains the same in total as the number of units produced changes?

Incremental budgeting , Incremental budgeting This is used to describe...

Incremental budgeting This is used to describe an incremental cost approach to budgeting where the next period budget is based on the current year’s results plus an extra amou

DQ 3-2, Using one of the companies from DQ 1, describe how inventory planni...

Using one of the companies from DQ 1, describe how inventory planning and accuracy can be defined using the Pareto principle. The company is Target, Inc.

Payback period, if equipment will be depreciated on a straight-line depreci...

if equipment will be depreciated on a straight-line depreciation basis over a five year period with an estimated residual value, what do I do with this information in a investment

Strategies in working capital management, No further banks were the sole so...

No further banks were the sole source of funds for working capital requires of the business sector. At current more finance options are obtainable to a Finance Manager to allow smo

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd