A retailer can increase its accounts payable to net sales ratio by _____.
A)increasing its inventory turnover
B)paying accounts payable early to receive cash discounts
C)switching to vendors with net 45 versus net 30 terms
D)increasing its initial markup

Question

Quizplus · Accepted Answer

By switching to vendors with net 45 terms, the retailer can delay payment of its accounts payable, thereby increasing the ratio of accounts payable to net sales. Option A of increasing inventory turnover would decrease the ratio, as would option B of paying accounts payable early to receive cash discounts. Option D of increasing initial markup has no direct impact on the ratio of accounts payable to net sales.

A Retailer Can Increase Its Accounts Payable to Net Sales