Managing Payable are creditors is always considered as an important task of liquidity management.
Companies try to avail longer credit period on credit purchases. Higher the credit period better the company’s liquidity position.
Payable Turnover ratio is considered as better metric to evaluate company’s strategy around managing its Payable balances.
This ratio tries to build relationship between the Revenue and the Outstanding Payable balances.
The Payable Turnover ratio formula and interpretation covers everything you need to know about this ratio.
- This template can be used to calculate the ratio quickly.
- The file has the Income Statement and Balance Sheet template in separate worksheets.
- The main Calculation sheet picks the numerator and denominator from respective Financials and arrives at the ratio.