![]() What is the effect of Accounts Payable Turnover on a company's cash flow?Īn Accounts Payable Turnover (APT) ratio measures how quickly a company can pay off its accounts payable over a period of time, and is an important metric when evaluating a company’s liquidity and cash flow. Furthermore, it’s a good idea to review all payables each month and prioritize payments in order to maintain the highest payments turnover rate. Tips for improving accounts payable turnover include taking advantage of days discounts, setting a payment deadline and automating payment processing. The annual rate is a good indicator for creditors evaluating a company’s overall liquidity, and the monthly rate paints a more accurate portrait of the cash flow in and out of the business. Many companies choose to calculate both the annual accounts payable turnover rate and the monthly accounts payable turnover rates. For example, a fiscal year turnover rate may take 365 days, instead of the traditional annual basis.
0 Comments
Leave a Reply. |
Details
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |