Estimates how long, on average, the company takes to pay trade creditors. The ratio for Days in Payables (v6095.00) is calculated as follows:
Accounts Payable (v2500.00) * Number of Days in Period
/ Cost of Goods Sold (v1040.00)
A high ratio does not indicate effective working capital management. High levels also could reflect inadequate cash flow to cover company obligations on a timely basis, which potentially could threaten continued purchase of supplies for operations.