![]() ![]() For instance, if the AP turnover ratio is 5, it signifies that the company has settled its debts to its suppliers 5 times throughout the duration of the period.Įnsure consistency in periods for this calculation. The figure you obtain represents the frequency with which the company has settled its typical payable amount within the specified period. Once you have these values, divide the total expenses from sales (or total acquisitions) by the average accounts payable to get the AP Turnover Ratio. These data points can be sourced from the company's balance sheet. The calculation is as follows: (Accounts Payable at Start of Period + Accounts Payable at End of Period) / 2. Average Accounts Payable: This value corresponds to the average amount that the company is in debt to its suppliers, stemming from goods and services it acquired on credit.In cases where the expenses from sales data is inaccessible, total acquisitions may be used as a substitute, although this data may not always be available in public financial documents. Generally, this data is located on the company's profit and loss statement. ![]()
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