True Blue Stores had a beginning accounts payable balance of $56,900 and an ending accounts payable 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

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The payables turnover rate is calculated as the cost of goods sold divided by the average accounts payable. The average accounts payable is the sum of the beginning and ending accounts payable balances divided by 2, which is ($56,900 + $62,800) / 2 = $59,850. The payables turnover rate is then $418,000 / $59,850 = 6.98 times.

True Blue Stores Had a Beginning Accounts Payable Balance of $56,900