Average Obligation Period Ratio

Average Obligation Period Ratio

Formula to calculate average obligation period:
Average Obligation Period = accounts payable / average daily purchases.



Average obligation period definition and explantion:


The average obligation period ratio measures the extent to which accounts payable represents current obligations (rather than overdue ones).



The average obligation period ratio is included in the the financial statement ratio analysis spreadsheets highlighted in the left column, which provide formulas, definitions, calculation, charts and explanations of each ratio.