Average Payment Period Formula

Average Payment Period Formula

Investors and creditors useĀ Average Payment Period Formula to find about the company that, is the company meet the current obligations or the company just skimming by? or, is the company uses its cash flow efficiently, taking the advantages of any credit discount?

Average Payment Period Formula

Average Payment Period Formula

Average Payment Period Formula calculated by dividing the average account payable by the derivation of credit purchases and days in the period.

Average Payment Period=Average Accounts Payable/(Total Credit Purchases/Days in Period)

This formula for the easy calculation can be written in the following form also.

Average Payment Period=({Begining + Ending Accounts Payable)/2}/(Total Credit Purchases/Days in Period)

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