Accounts payable turnover days
factor.formula
Days Sales Outstanding in Accounts Payable:
Accounts Payable Turnover:
Among them: Average balance of accounts payable: the arithmetic average of the balance of accounts payable at the beginning of the period and the balance of accounts payable at the end of the period. Operating costs: refers to the costs incurred by an enterprise in selling goods or providing services in a certain period, which can be obtained directly from the income statement. 360: is the approximate number of days in a year, which is convenient for converting turnover rate into turnover days.
- :
Measuring the average number of days a company takes to settle its accounts payable reflects the efficiency of the company's use of supplier funds.
- :
The arithmetic mean of the beginning and ending accounts payable balances reflects the average amount owed by the company to suppliers over a certain period of time.
- :
The cost of selling goods or providing services for a company over a certain period of time.
factor.explanation
Accounts payable turnover days reflect the company's ability to use supplier funds and its efficiency in short-term debt management. The higher the value of this indicator, the longer the company occupies the supplier's funds, which can alleviate the company's short-term funding pressure to a certain extent and improve the company's working capital efficiency. However, it should be noted that too long accounts payable turnover days may have a negative impact on the company's cooperative relationship with suppliers, so companies need to strike a balance between using supplier funds and maintaining good supplier relationships. In practical applications, the industry average and the company's own historical data should be combined for analysis to determine the rationality of the indicator and its changing trend. In addition, this indicator is usually used in combination with other operating capacity indicators (such as inventory turnover days and accounts receivable turnover days) to more comprehensively evaluate the company's overall operating capacity.