Month: January 2022

A higher accounts payable turnover ratio is almost always better than a low ratio. It’s used to show how quickly a company pays its suppliers during a given accounting period. The accounts payable turnover ratio indicates to creditors the short-term liquidity and, to that extent, the creditworthiness of the company. A high ratio indicates prompt […]

The accounts payable turnover formula is calculated by dividing the total purchases by the average accounts payable for the year. The accounts payable turnover ratio of a company is often driven by the credit terms of its suppliers. For example, companies that obtain favorable credit terms usually report a relatively lower ratio. Accounts payable at […]