Question

A company reports Cost of Goods Sold of $320,000, Ending Inventory of $105,000, Beginning Inventory of $55,000, Ending Accounts Payable of $115,000, and Beginning Accounts Payable of $85,000. What is the accounts payable turnover? (Round your final answer to two decimal places.)

A. 3.68
B. 2.52
C. 3.04
D. 4.43

Answer 1

The accounts payable turnover is 3.20.

Step-by-step explanation:

The accounts payable turnover can be calculated by dividing the cost of goods sold by the average accounts payable. The formula is as follows:

Accounts Payable Turnover = Cost of Goods Sold / Average Accounts Payable

To find the average accounts payable, we can add the beginning and ending accounts payable and divide by 2:

Average Accounts Payable = (Beginning Accounts Payable + Ending Accounts Payable) / 2

Using the given information:

Average Accounts Payable = ($85,000 + $115,000) / 2 = $100,000

Now we can calculate the accounts payable turnover:

Accounts Payable Turnover = $320,000 / $100,000 = 3.20

Rounded to two decimal places, the accounts payable turnover is 3.20.