Accounts Payable Turnover Ratio

Accounts Payable Turnover Ratio

Formula to calculate accounts payable turnover ratio:
Accounts Payable Turnover Ratio = total supplier purchases / average accounts payable

Accounts Payable Turnover Ratio definition and explanation:
The accounts payable turnover ratio shows the number of times that accounts payable are paid throughout the year.

A falling accounts payable turnover ratio indicates that the company is taking longer to pay its suppliers.

The accounts payable turnover ratio is listed in our liquidity ratios and turnover ratios.