Question

The ratio of cost of goods sold to accounts payable is called .

• A. turnover ratio
• B. cash conversion
• C. days receivable
• D. days payable

Answer 1

The correct option is D days payable

The accounts payable turnover ratio, also known as the payables turnover or the creditor’s turnover ratio, is a liquidity ratio that measures how many times a company pays its creditors over an accounting period. The accounts payable turnover ratio is a measure of short-term liquidity, with a higher payable turnover ratio being more favorable.