The accounts payable turnover ratio measures
A)number of times the company settles its trade payable.
B)average accounts payable balance.
C)the average number of times the industry settles their trade payable.
D)the average balance of accounts payable to current assets.

Question

Quizplus · Accepted Answer

The accounts payable turnover ratio measures the number of times that a company settles its trade payable within a given period, usually a year. This ratio is calculated by dividing the cost of goods sold by the average accounts payable balance during that period. Therefore, option A is the correct choice. Option B is incorrect as it only represents one component of the ratio. Option C is also incorrect as it focuses on the industry average rather than the company's performance. Option D is incorrect as it combines accounts payable with current assets, which is not relevant to the calculation of the ratio.

The Accounts Payable Turnover Ratio Measures