What is the trade payable days turnoveryear-end trade, Ask an Expert

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What is the Trade payable days (turnover)

Year-end trade payables/Credit purchases (or cost of sales)x 365days

This is the length of time taken to pay suppliers. The ratio can also be computed using cost of sales, since credit purchases aren't usually stated in financial statements.

High trade payable day's is good as credit from suppliers represents free credit. If it's too high then there is a risk of suppliers not extending credit in the future and may lose goodwill. High trade payable days may also specify that business has no cash to pay which indicates insolvency problems.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M9580517

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