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Monday, May 30, 2011

Creditors Turnover Ratio Formula & Example

Definition: Creditors Turnover Ratio (also known as Accounts Payable Turnover Ratio) is calculated by taking the total purchases made and dividing it by the average accounts payable during the period. It is used to measure the rate at which a firm pays off its suppliers.

Formula:
Creditors Turnover Ratio = Credit Purchases / Average Trade Creditors
Or,
Accounts Payable Turnover (APT) Ratio =

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