Glossary -> Accounts payable turnover ratio
Accounts Payable Turnover Ratio
The accounts payable turnover ratio is calculated as
total purchases in the year
average accounts payable
Average accounts payable can be determined 2 different ways:
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If this ratio decreases from one year to the next, it means the company is taking longer to pay off its suppliers. If the ratio increases, the company is paying off its suppliers more quickly.
Revised: October 26, 2023