Restaurant Franchising, 3rd Edition

Accounts payable turnover. This is a short-term liquidity measure used to

quantify the rate at which the company pays off its suppliers. An accounts

payable turnover ratio is calculated by taking the total purchases made

from suppliers and dividing that number by the average acco unts payable

during a selected period of time. It can be calculated as: Accounts Payable

Turnover = Total Supplier Purchases ÷ Average Accounts Payable OR

Accounts Payable Turnover = Cost of Goods Sold ÷ Accounts Payable.

Accounts receivable turnover is used to quantify a company’s effective-

ness in extending credit as well as collecting debts. The receivables turn- ...