Payables Days
0.0(0)
Studied by 0 people0.0(0)
View linked note
Call with Kai
Learn
Practice Test
Spaced Repetition
Match
Flashcards
Knowt PlayCard Sorting
1/4
There's no tags or description
Looks like no tags are added yet.
Study Analytics
Name | Mastery | Learn | Test | Matching | Spaced | Call with Kai |
|---|
No study sessions yet.
5 Terms
1
New cards
What are trade payables?
Amounts owed by a business to suppliers and others
2
New cards
What do trade payables show?
The average length of time taken by a business to pay amounts it owes
3
New cards
What is the equation?
(Trade payables/Cost of sales) x365
4
New cards
How should you interpret results?
In general, a higher figure is better for cash flow
Ideally, payable days are higher than receivable days
Be careful: a high figure may suggest liquidity problems (stretching supplier goodwill)
5
New cards
What should you look for when evaluating payable days?
Evidence from the current ratio or acid test ratio that business has problems paying creditors
Window-dressing: This is the easiest figure to manipulate
Flashcards (51)