What is Payables Turnover and why is it important?
Payables Turnover is a financial ratio that shows how many times a company pays its average accounts payable within a period, typically a year. It helps assess how effectively a company manages its cash and supplier payments. A high turnover ratio means the business pays its obligations quickly, often taking advantage of early payment discounts. A low ratio could raise concerns about delayed payments or liquidity problems. Understanding payables turnover helps investors and creditors evaluate a company's financial discipline and cash flow management.
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