Definition: What is Account Payable Turnover Ratio?
Account Payable Turnover ratio is the liquidity ratio. It compares the net credit purchase to average account payable during a period in order to show the ability of the company to pay off its account payable.
Investors and creditors use this ratio to measure the liquidity of the company by gauging, how easily a firm pay to its vendors and suppliers.
Throughout the year if the company payoff supplies frequently then such company easily pay regular interest and principal payment which is the good indication of the company for creditors.
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