Accounting Formulas

Question 1

Accounts Payable Turnover

Answer 1

the average number of days it takes for a business to pay Accounts Payable. (measured as “Faster” or “Slower” as compared to previous APTO)

APTO =
(Average Acc. Pay. /Net Credit Purchases [plus GST]) * 365

Question 2

Accounts Receivable Turnover

Answer 2

the average number of days that it takes for a business to receive cash from its Accounts Receivable. (measured as “faster” or “slower” as compared to other periods)

Measured by:
(Average Acc. Rec. / Net Credit Sales [plus GST]) * 365