Payables Turnover
Short answer
Payables turnover is how many times per year you pay off your average accounts payable balance.
Formula
Payables Turnover = COGS / Accounts Payable
Annual cost of goods sold divided by accounts payable on the balance sheet.
Why it matters
Lower turnover (higher DPO) usually means you're using supplier credit strategically. Too low can damage supplier relationships; too high means you're paying earlier than you have to.
Benchmarks
People also ask
Common questions about Payables Turnover
What is Payables Turnover?+
Payables turnover is how many times per year you pay off your average accounts payable balance.
How is Payables Turnover calculated?+
Annual cost of goods sold divided by accounts payable on the balance sheet.
What is a good Payables Turnover?+
A healthy payables turnover is typically around 6–8×/yr — stretching terms strategically. Specific targets vary by industry and stage; check our benchmarks above for your sector.
Why does Payables Turnover matter?+
Lower turnover (higher DPO) usually means you're using supplier credit strategically. Too low can damage supplier relationships; too high means you're paying earlier than you have to..
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