Question

Hare, Inc., had a cost of goods sold of $45,121. At the end of the year, the accounts payable balance was $8,493. How long on average did it take the company to pay off its suppliers during the year? (Use 365 days a year. Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)

Answer 1

Answer: 69 days(approx.)

Step-by-step explanation:

Given that,

Cost of goods sold = $45,121

Accounts payable balance = $8,493

Creditor Turnover ratio:

=
`(Cost\ of\ goods\ sold)/(Accounts\ payable)`

=
`(45,121)/(8,493)`

= 5.312 times in a year

To convert into 365 days

=
`(365)/(5.312)`

= 68.71 days

Conclusion: the company needs to take average time for pay off its creditors is 69 days(approx.).