Question

Selected recent balance sheet and income statement information for The Gap, Inc. follows: (in millions) 2014 Year-end accounts payable $ 1,242 Average accounts payable 1,193 Sales 16,148 Cost of goods sold 9,855 Accounts payable days outstanding for 2014 is:

Answer 1

Answer:

46 days

Explanation:

Given that,

Ending Accounts Payable = $1,242

Cost of goods sold = 9,855

Average accounts payable = 1,193

Payable turnover ratio = Cost of goods sold ÷ number of days

                                     = 9,855 ÷ 365

                                     = 27

Days Payable Outstanding:

= Ending Accounts Payable ÷ Payable turnover ratio

= $1,242 ÷ 27

= 46

Therefore, the payable days outstanding for 2014 is 46.