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

Imposed budgets- budgetary styles, Imposed Budgets In this approach to ...

Imposed Budgets In this approach to budgeting, top management prepares a budget with little or no help from operating personnel, which is then obligatory upon the employees who

Production, Production As you would suspect, effectively directing an o...

Production As you would suspect, effectively directing an organization needs prudent management of production. Because this is a hands-on process, and often entails dealing wit

Factoring services, Factoring Services: All subsequent services are offer ...

Factoring Services: All subsequent services are offer through the factor apart from the core service of purchasing receivables. 1)    Sales credit management and Ledger adminis

What is ratio analysis, Ratio analysis A ratio is a simple arithmetical...

Ratio analysis A ratio is a simple arithmetical expression of the relationship of one number to another. It may be explained as the indicated quotient of two mathematical ex

What is pricing decision, Introduction to pricing decision A pricing d...

Introduction to pricing decision A pricing decision is one of the most crucial and difficult decision that a firm has to make. It is one of the most difficult decisions. Such

State the factors of cvp, State the factors of CVP The three factors of...

State the factors of CVP The three factors of CVP analysis I e cost volume and profit are interconnected and dependent on one another . for example profit depends upon sales se

Stating dependent variable-cost estimating relationship, State (or select) ...

State (or select) the dependent variable (Y) Will the CER be employed to estimate price, labor hours, cost, material cost, or some other measure of cost? Will the CER be employ

What rights do the stockholders have, When forming a company, the options a...

When forming a company, the options are sole proprietor, partnership, and corporation. Most choose corporation. Why is the corporate form seen to be best? What rights do the stockh

Management accounting influence, Management Accounting Influence (A) ...

Management Accounting Influence (A) Transfer pricing and performance measurement relies upon the judgment of the management accountant to make a suitable choice of approach

Difference between budgetary control and standard costing, Difference betwe...

Difference between budgetary control and standard costing Budgetary control The budgets are prepared for the concern as a whole. The budgets are fixed on the basis of p

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