average days payable

average days payable definition - finance
A ratio calculated by dividing 365 days by the payables turnover ratio. Payables turnover ratio is calculated by adding cost of goods sold to any change in inventory and dividing that number by average accounts payable. Average days payable gives an idea of how much time passes before a company pays its accounts payables. If the time increases, then the company may be having difficulty paying its bills.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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