Accounts Payable Turnover

Metadata

  • Id: accounts_payable_turnover
  • Type: fundamentals
  • Subtype: ratios
  • Units: ratio
  • Decimal Points: 2
  • Currency Convertible: No
  • Tags: “accounts payable turnover”, “APT”, “creditor’s turnover ratio”, “payables turnover ratio”, “supplier payment period”

Description

Accounts payable turnover is a measure of how quickly a company pays its suppliers for the goods and services it buys on credit. It shows how many times a company clears its accounts payable balance in a given period. A higher ratio means the company pays its suppliers faster, which can indicate good cash flow and creditworthiness. A lower ratio means the company takes longer to pay its suppliers, which can indicate cash flow problems or favorable credit terms. The formula for accounts payable turnover is:
Accounts payable turnover = Total supply purchases / Average accounts payable
Where: - Total supply purchases = Ending inventory (BS009, bs_inventories) + Cost of goods sold (TM013, ttm_cogs) - Beginning inventory (BS009, bs_inventories) - Average accounts payable = (Beginning accounts payable + Ending accounts payable) / 2, where Accounts Payable (BS038, bs_acct_payable)