True Blue Stores had a beginning trade payables balance of £56,900 and an ending trade payables balance of £62,800.Sales for the period were £670,000 and costs of goods sold were £418,000.
What is the payables turnover rate?

Question

Quizplus · Accepted Answer

The payables turnover rate is calculated by dividing the cost of goods sold by the average trade payables. The average trade payables is the sum of the beginning and ending trade payables divided by 2. So, the average trade payables = (£56,900 + £62,800) / 2 = £59,850. The cost of goods sold is £418,000. Therefore, the payables turnover rate = £418,000 / £59,850 = 6.98 times.

True Blue Stores Had a Beginning Trade Payables Balance of £56,900