Payables Ratio

Accounts Payables Ratio = Cost of Goods Sold/Average Accounts Payables.

The accounts payables turnover measures how quickly the business is settling its bills.

The higher this ratio the faster payables are being settled.

Companies do not usually reveal the amount of purchases they make, however it is fairly simple to use the following calculation:

Purchases = Cost of goods sold + ending inventory - opening inventory.

The accounts payable turnover measure is also used to calculate Days of accounts payable outstanding.

Software Links

Ratios With Excel