Which one of the following financial ratios has a numerator and denominator whose amounts should change by approximately the percentage from year to year?
A) quick ratio.
B) current ratio.
C) accounts payable turn days.
D) payables as a percentage of total assets.
E) cost of goods sold to accounts payable

Question

Quizplus · Accepted Answer

Accounts payable turn days is a measure of how long it takes a company to pay its suppliers. The numerator is the average accounts payable balance, and the denominator is the cost of goods sold. Both of these amounts should change by approximately the same percentage from year to year, as the company's sales and purchases should grow at a similar rate.

Which One of the Following Financial Ratios Has a Numerator