Thread: Accounts payable turnover ratio

Can some body let me know what is the formula I should use to find out Accounts payable turnover.

Thanks.

Formula to calculate accounts payable turnover ratio:
Accounts Payable Turnover Ratio = total supplier purchases / average accounts payable

Accounts Payable Turnover Ratio definition and explanation:
The accounts payable turnover ratio shows the number of times that accounts payable are paid throughout the year.

A falling accounts payable turnover ratio indicates that the company is taking longer to pay its suppliers.

The accounts payable turnover ratio is listed in our liquidity ratios and turnover ratios.

Overall not a very useful ratio as there is a lot of inconsistency and uncertainty attached to what should be included in both the numerator and denominator.

It might be useful as an internal management tool where you know and control the numbers being used or to measure the change in a company at a later point in time. But would not use to compare one company against another.