Landseeker's Restaurants reported cost of goods sold of $322 million and accounts payable of $84 million for 2020.In 2019,cost of goods sold was $258 million and accounts payable was $72 million.Landseeker's accounts payable turnover ratio in 2020 is closest to:

Question

Quizplus · Accepted Answer

Accounts payable turnover ratio measures how many times a company pays off its suppliers for goods during a period. It is calculated by dividing the cost of goods sold by the average accounts payable for a period.

Accounts payable turnover ratio = Cost of goods sold / Average accounts payable

Average accounts payable = (Beginning accounts payable + Ending accounts payable) / 2

For Landseeker's Restaurants, 
Accounts payable turnover ratio in 2019 = 258 / ((72+84)/2) = 3.12
Accounts payable turnover ratio in 2020 = 322 / ((72+84)/2) = 3.98

The closest option to 3.98 is 4.13, which is the answer B.

Landseeker's Restaurants Reported Cost of Goods Sold of $322 Million