Definition for : Days' payables ratio

The days' Payables ratio measures the average payment terms granted to the company by its suppliers (or the average actual payment period). It is calculated by dividing Accounts payable by average daily Purchases (VAT inclusive) or by Sales, if the amount of Purchases is not shown in the accounts. Days' Payables ratio is also called Days purchases outstanding.

(See Chapter 11 Working capital and capital expenditures of the Vernimmen)

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