Question

Heritage, Inc., had a cost of goods sold of $44,021. At the end of the year, the accounts payable balance was $8,043. How long on average did it take the company to pay off its suppliers during the year?

Answer 1

Answer:

it will take 66.69 days to pay off its supplier

Explanation:

We have given cost of goods sold = $44021

And account payble balance = $8043

Credit turnover ratio will be equal to

Credit turnover $=\frac{cost\ of\ goods\ sold}{average\ account\ payble}=\frac{44021}{8043}=5.473times$

We know that 1 year = 365 days

So number of days will be equal to $=\frac{365}{5.473}=66.69days$

So it will take 66.69 days to pay off its supplier