Accounts Payable Turnover
factor.formula
Accounts Payable Turnover:
Average accounts payable:
This formula is used to calculate the accounts payable turnover ratio, where:
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It indicates the total operating costs in the last 12 months, also known as rolling 12-month operating costs. Using TTM data can more accurately reflect the recent operating conditions of the company and avoid the impact of seasonal or short-term fluctuations. Operating costs are the direct costs incurred by the company in the process of selling goods or providing services, and are an important indicator for measuring the company's operating efficiency and profitability.
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It indicates the average balance of accounts payable during the reporting period, usually calculated by averaging the accounts payable at the beginning and end of the period. The average accounts payable can more truly reflect the average level of supplier funds occupied by the enterprise during the reporting period, and is more representative than simply using the accounts payable at the end of the period.
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Indicates the balance of accounts payable at the beginning of the reporting period. This data reflects the total amount of debt owed by the company to suppliers at the beginning of the reporting period and is usually obtained from the beginning data of the company's balance sheet.
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Indicates the balance of accounts payable at the end of the reporting period. This data reflects the total amount of debt owed by the company to suppliers at the end of the reporting period and is usually obtained from the end-of-period data of the company's balance sheet.
factor.explanation
Accounts payable turnover is mainly used to measure the efficiency and ability of enterprises to use supplier credit funds. The higher the turnover rate, the shorter the payment cycle of the enterprise, the lower the dependence on suppliers, and the stronger the cash flow management ability, but it may also miss some bargaining opportunities with suppliers. A low turnover rate means that the enterprise may need to pay longer, which will help the capital chain in the short term, but in the long run it may lead to tensions with suppliers and may affect the reputation of the enterprise. A low turnover rate may also mean that the enterprise has strong bargaining power in the supply chain and can use the supplier's funds for short-term financing. Therefore, when analyzing this indicator, it is necessary to consider the characteristics of the industry, the business model of the enterprise, the cash flow situation, and the negotiation ability with suppliers.