What is the Accounts Payable Turnover Ratio?

Posted by accountingbyte on Aug 01, 2024; 11:52am
URL: http://forum.446.s1.nabble.com/What-is-the-Accounts-Payable-Turnover-Ratio-tp6259.html

The accounts payable turnover is an index of the effectiveness with which the operations of a company discharge the supplier’s payables. It is computed by using the formula that is the total purchases divided by average accounts payable for a period. This scenario highlights that a higher KDD signifies faster payment made to the suppliers within a specific period which can be an indicator to good strength and healthy financial position of an organization. On the other hand, a ratio below this is an indication of some problems with the firm’s liquidity or its ability to deal with payables.