Vendor
payment period
The last of the working capital trio. How to calculate your
accounts payable days or vendor days outstanding
We take the amount we owe to our vendors at the end of the
period and divide it by the COGS (including the direct shipment COGS)[i].
We then multiply the result with the trading days represented in the total
COGS.
Accounts payable or vendor days outstanding are useful when
wanting to compare your inventory holding with how quickly you pay your
vendors. If you not taking settlement discount, your payable days should exceed
your inventory days.
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