Читать книгу Financial Management 101 - Angie Mohr - Страница 16

Payables turnover is the flip side of the receivables turnover. It tells us how quickly we pay our suppliers. It is calculated as:

Payables turnover = COGS ÷ Accounts payable

If our cost of goods sold is $87,621 and our payables are $16,411, the payables turnover ratio would be calculated as —

Payables turnover = COGS ÷ Accounts payable

$87,621 ÷ $16,411 = 5.3 times

The average number of days before we pay our suppliers is —

= 365 days ÷ Payables turnover

= 365 days ÷ 5.3 = 68.9 days

This tells us that, on average, we pay our suppliers in almost 69 days. If our suppliers’ terms are net 30, we are probably incurring late payment penalties and interest. This isn’t the most efficient use of our resources. On the other hand, if our suppliers’ terms are net 30 and we pay on average in 15 days, we are prepaying our liabilities, which also is not a good use of our resources.