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Average Payment Period Calculator

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✖Average Accounts Payable is a financial metric that represents the average amount of money a company owes to its suppliers or vendors over a specific period.ⓘ Average Accounts Payable [AAP]			+10% -10%
✖Credit Purchases refer to goods or services that a company acquires from suppliers or vendors on credit.ⓘ Credit Purchases [CP]			+10% -10%
✖Number of Days in Period refers to the total number of days that a specific time frame or reporting period encompasses.ⓘ Number of Days in Period [No.days]			+10% -10%

✖Average Payment Period provides insight into a company's efficiency in managing its accounts payable and its relationships with suppliers.ⓘ Average Payment Period [APP]

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Average Payment Period Solution

STEP 0: Pre-Calculation Summary

Formula Used

Average Payment Period = Average Accounts Payable/(Credit Purchases/Number of Days in Period)
APP = AAP/(CP/No.days)
This formula uses 4 Variables

Variables Used

Average Payment Period - Average Payment Period provides insight into a company's efficiency in managing its accounts payable and its relationships with suppliers.
Average Accounts Payable - Average Accounts Payable is a financial metric that represents the average amount of money a company owes to its suppliers or vendors over a specific period.
Credit Purchases - Credit Purchases refer to goods or services that a company acquires from suppliers or vendors on credit.
Number of Days in Period - Number of Days in Period refers to the total number of days that a specific time frame or reporting period encompasses.

STEP 1: Convert Input(s) to Base Unit

Average Accounts Payable: 28300 --> No Conversion Required
Credit Purchases: 48000 --> No Conversion Required
Number of Days in Period: 30 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

APP = AAP/(CP/No.days) --> 28300/(48000/30)

Evaluating ... ...

APP = 17.6875

STEP 3: Convert Result to Output's Unit

17.6875 --> No Conversion Required

FINAL ANSWER

17.6875 <-- Average Payment Period

(Calculation completed in 00.004 seconds)

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Average Payment Period Formula

LaTeX Go

Average Payment Period = Average Accounts Payable/(Credit Purchases/Number of Days in Period)
APP = AAP/(CP/No.days)

What is Average Payment Period?

Average Payment Period provides insight into how efficiently a company manages its accounts payable and its relationships with suppliers.A shorter Average Payment Period indicates that a company is paying its suppliers more quickly, which may be seen as a positive sign of strong liquidity and good supplier relationships. However, it could also suggest that the company is not taking full advantage of credit terms offered by suppliers.
On the other hand, a longer Average Payment Period may indicate that a company is stretching its payables to preserve cash flow or taking advantage of extended payment terms offered by suppliers. While this can be a strategy to manage working capital, it could strain relationships with suppliers if not managed carefully.
It's essential to analyze the Average Payment Period in the context of the industry norms, company's credit terms with suppliers, and its overall cash flow management to understand its implications better.

How to Calculate Average Payment Period?

Average Payment Period calculator uses Average Payment Period = Average Accounts Payable/(Credit Purchases/Number of Days in Period) to calculate the Average Payment Period, The Average Payment Period is a financial metric that measures the average number of days it takes for a company to pay its suppliers or vendors after receiving goods or services. Average Payment Period is denoted by APP symbol.

How to calculate Average Payment Period using this online calculator? To use this online calculator for Average Payment Period, enter Average Accounts Payable (AAP), Credit Purchases (CP) & Number of Days in Period (No.days) and hit the calculate button. Here is how the Average Payment Period calculation can be explained with given input values -> 17.6875 = 28300/(48000/30).

FAQ

What is Average Payment Period?

The Average Payment Period is a financial metric that measures the average number of days it takes for a company to pay its suppliers or vendors after receiving goods or services and is represented as APP = AAP/(CP/No.days) or Average Payment Period = Average Accounts Payable/(Credit Purchases/Number of Days in Period). Average Accounts Payable is a financial metric that represents the average amount of money a company owes to its suppliers or vendors over a specific period, Credit Purchases refer to goods or services that a company acquires from suppliers or vendors on credit & Number of Days in Period refers to the total number of days that a specific time frame or reporting period encompasses.

How to calculate Average Payment Period?

The Average Payment Period is a financial metric that measures the average number of days it takes for a company to pay its suppliers or vendors after receiving goods or services is calculated using Average Payment Period = Average Accounts Payable/(Credit Purchases/Number of Days in Period). To calculate Average Payment Period, you need Average Accounts Payable (AAP), Credit Purchases (CP) & Number of Days in Period (No.days). With our tool, you need to enter the respective value for Average Accounts Payable, Credit Purchases & Number of Days in Period and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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