![]() Here we discuss the introduction, examples, advantages, and disadvantages of the APT Ratio along with a downloadable Excel template.Various ratios are calculated for analysis of financial information, among which turnover ratio is a crucial one. This is a guide to the Accounts Payable Turnover Ratio. On the other hand, a lower accounts receivable turnover ratio means that the company takes longer to pay off its creditors, which can indicate a weak liquidity position. Typically, a higher value indicates that the company pays off its creditors more frequently, reflecting better working capital management. So, accounts payable measures the liquidity position of a company. In the absence of credit purchases, total purchases are used, which can result in misrepresentation of a company’s credit policy. The ratio can be used to assess a company’s credit policy and its suppliers’ negotiating power. Source: Walmart Annual Reports (Investor Relations) Advantages paid off its payables 8.55 times during 2018. Average Accounts Payable = $43,763 million.Average Accounts Payable = ($41,433 million + $46,092 million) / 2.The formula used to calculate the total purchase is as follows: Calculate the accounts payable turnover ratio for Walmart Inc. According to the annual report, the cost of sales was $373,396 million, opening and closing inventory stood at $43,046 million and $43,783 million respectively and opening accounts payable and closing accounts payable stood at $41,433 million and $46,092 million respectively. Let us take the example of Walmart Inc.’s annual report for the year 2018. paid off it’s payable 3.25 times during the year 2018. The formula used to calculate the ratio is as follows: ![]()
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