In 20X3, Toys 4 U had a trade payables turnover ratio of 6.08; in 20X2, 5.87; and 5.45 in 20X1. Which statement is true about what the ratios indicate?
A) Toys 4 U is taking longer to pay its vendors in 20X3 versus 20X2.
B) Toys 4 U is taking less time to pay vendors in 20X3 than it took in both 20X2 and 20X1.
C) Toys 4 U has been increasing its average payables at a faster rate than its cost of goods sold has increased.
D) Toys 4 U is taking less time to collect from its customers.

Question

Quizplus · Accepted Answer

The increasing trade payables turnover ratio from 5.45 in 20X1 to 6.08 in 20X3 indicates that Toys 4 U is paying its vendors more quickly over time.

In 20X3, Toys 4 U Had a Trade Payables Turnover