The accounts payable turnover ratio can reveal
A)the result of sales divided by average working capital.
B)the number of days in the operating cycle.
C)the length of the operating cycle in order to compare it with industry averages.
D)the number of days that a firm's accounts payable remain outstanding.
E)none of the above.

Question

Quizplus · Accepted Answer

The accounts payable turnover ratio shows the number of times a company pays off its accounts payable during a certain period. It is calculated by dividing the cost of goods sold by the average accounts payable balance. This ratio can reveal the number of days that a firm's accounts payable remain outstanding, which is important in determining the efficiency of a company's payment cycle.

The Accounts Payable Turnover Ratio Can Reveal