Asked by Leslie Alaniz on Jul 15, 2024
Verified
The accounts payable turnover ratio is calculated by dividing accounts payable by cash payments to suppliers.
Cash Payments
Outflows of cash to settle obligations or purchase goods and services as part of business operations.
Accounts Payable Turnover Ratio
A financial metric used to analyze how quickly a company pays off its suppliers by comparing net credit purchases to the average accounts payable during a period.
- Determine and illustrate the significance of the accounts payable turnover ratio and its impact on business activities.
Verified Answer
TJ
Tatyana JuarezJul 21, 2024
Final Answer :
False
Explanation :
The accounts payable turnover ratio is calculated by dividing the total purchases by average accounts payable, not by cash payments to suppliers.
Learning Objectives
- Determine and illustrate the significance of the accounts payable turnover ratio and its impact on business activities.
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