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Accounts Payable

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Business Glossary

Definitions for: days purchases in accounts payable
days purchases in accounts payable

ratio measuring the extent that accounts payable represent current rather than overdue obligations. A comparison should be made to the terms of purchase. Accounts payable are divided by the purchases per day. The latter is determined by dividing purchases by 360 days. Assume accounts payable is $50,000 and purchases are $800,000. The ratio is:

$50,000
$800,000/360
= $50,000
$2,222.22
= 22.50

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