Rocky Mountain Homes has sales of $1.45 million and average accounts payable of $74,400. The cost of goods sold is equivalent to 80% of sales. How long does it take Rocky Mountain to pay its suppliers?

Question

Quizplus · Accepted Answer

The correct answer is A.The average payment period is calculated as (Average accounts payable / Cost of goods sold) * 365 days.In this case, the average payment period is ($74,400 / ($1.45 million * 0.8)) * 365 days = 23.41 days.

Rocky Mountain Homes Has Sales of $1