To calculate payables turnover,an increase in merchandise inventory must be added to cost of goods sold before dividing by average accounts payable.

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To accurately calculate payables turnover, an increase in merchandise inventory must be included in the cost of goods sold. This is done to account for the timing difference between when inventory is purchased and when it is sold, which can impact the average accounts payable balance.

To Calculate Payables Turnover,an Increase in Merchandise Inventory Must Be