Accounts Payable Turnover Ratio Template

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Accounts Payable Turnover Ratio Template

This Accounts Payable Turnover Ratio Template will show you how to calculate payable turnover ratio and payable turnover in days.

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Accounts Payable Turnover Ratio Template Screenshot

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What is the Accounts Payable Turnover Ratio?

The accounts payable turnover ratio, also known as the payables turnover or the creditor’s turnover ratio, is a liquidity ratio that measures how many times a company pays its creditors over an accounting period. The accounts payable turnover ratio is a measure of short-term liquidity, with a higher payable turnover ratio being more favorable.

The accounts payable turnover ratio indicates to creditors the short-term liquidity, and to that extent the creditworthiness of the company. A high ratio indicates prompt payment being made to suppliers for purchases on credit. A high number may be due to suppliers demanding quick payments, or it may indicate that the company is seeking to take advantage of early payment discounts or actively working to improve its credit rating.

A low ratio indicates slow payment to suppliers for purchases on credit. This may be due to favorable credit terms, or it may signal cash flow problems and hence a worsening financial condition. While a decreasing ratio could indicate a company in financial distress, that may not necessarily be the case. It might be that the company has successfully managed to negotiate better payment terms which allow it to make payments less frequently, without any penalty.

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Analyst Certification FMVA® Program

Below is a break down of subject weightings in the FMVA® financial analyst program. As you can see there is a heavy focus on financial modeling, finance, Excel, business valuation, budgeting/forecasting, PowerPoint presentations, accounting and business strategy.

 

Financial Analyst certification curriculum

 

A well rounded financial analyst possesses all of the above skills!

 

Additional Questions & Answers

CFI is the global institution behind the financial modeling and valuation analyst FMVA® Designation. CFI is on a mission to enable anyone to be a great financial analyst and have a great career path. In order to help you advance your career, CFI has compiled many resources to assist you along the path.

In order to become a great financial analyst, here are some more questions and answers for you to discover:

 

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