## Understanding Accounts Payable TurnoverIn this section, we explore how to calculate the accounts payable turnover, a critical financial metric that helps assess how efficiently a company is paying its suppliers.### Information ProvidedRoberts Company reported the following details for the fiscal year:- **Accounts Payable:** - Beginning of year: $75,000 - End of year: $125,000- **Net Sales:** $1,600,000- **Cost of Goods Sold (COGS):** $800,000### Calculating the Accounts Payable TurnoverTo find the accounts payable turnover ratio, use the formula:\[ \text{Accounts Payable Turnover} = \frac{\text{Cost of Goods Sold}}{\text{Average Accounts Payable}} \]#### Steps:1. **Calculate the Average Accounts Payable:** \[ \text{Average Accounts Payable} = \frac{\text{Beginning Accounts Payable} + \text{End of Year Accounts Payable}}{2} \] \[ \text{Average Accounts Payable} = \frac{75,000 + 125,000}{2} = 100,000 \]2. **Apply the Formula:** \[ \text{Accounts Payable Turnover} = \frac{800,000}{100,000} = 8.0 \]### Interpretation- A high accounts payable turnover ratio, like this one, typically suggests that a company is paying its suppliers promptly.- This ratio reflects the company's efficiency in managing its payable obligations.### Diagram DescriptionThe diagram illustrates the formula for accounts payable turnover and highlights its significance. A higher ratio indicates timely payment to suppliers, integral for managing supplier relationships and cash flow efficiently.

Account payable turnover ratio = The accounts payable turnover ratio, also known as the payables…

Cost of Goods Sold Accounts Payable Turnover Average Accounts Payable Company Is paylng suppllers In a timely manner High accounts payable ratio ok t Knowledge Check 01 Roberts Company reported the following information: ces Accounts Payable: Beginning of year End of year 75,000 125,000 1,600,000 800,000 Net sales Cost of goods sold What is the company's accounts payable turnover ratio? (Round your answer to 1 decimal pl- Accounts payable turnover ratio

Cost of Goods Sold Accounts Payable Turnover Average Accounts Payable Company Is paylng suppllers In a timely manner High accounts payable ratio ok t Knowledge Check 01 Roberts Company reported the following information: ces Accounts Payable: Beginning of year End of year 75,000 125,000 1,600,000 800,000 Net sales Cost of goods sold What is the company's accounts payable turnover ratio? (Round your answer to 1 decimal pl- Accounts payable turnover ratio

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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