The calculation for the average payment period is very similar to average collection period and average age in inventory.

Question

Quizplus · Accepted Answer

The calculation for the average payment period involves dividing accounts payable by the daily cost of goods sold, just like the calculations for average collection period and average age in inventory involve dividing accounts receivable and inventory, respectively, by the daily sales and cost of goods sold. Therefore, the statement is true.

The Calculation for the Average Payment Period Is Very Similar