Question

Heritage, inc., had a cost of goods sold of $45,821. At the end of the year, the accounts payable balance was $8,773. 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 answer to 2 decimal places,

e.G., 32.16.)

Answer 1

Calculation of Days Payable Outstanding:

Days Payable Outstanding can be calculated using the following formula:

Days Payable Outstanding = (Accounts

Payable *365) / Cost of Goods Sold

= (8,773*365)/45,821

= 69.88

Hence, Days Payable Outstanding is 69.88 days. We can say that it takes on average 69.88 days to the company to pay off its suppliers during the year.