Question

Landseeker's Restaurants reported cost of goods sold of $338 million and accounts payable of $68 million for 2020. In 2019, cost of goods sold was $274 million and accounts payable was $56 million. Landseeker’s accounts payable turnover ratio in 2020 is closest to: ___

Answer 1

Answer:

5.45 times

Explanation:

The computation of the accounts payable turnover ratio is shown below:

= Cost of goods sold ÷ average accounts payable

where,  

Average accounts payable = (Opening balance of Accounts payable + ending balance of Accounts payable) ÷ 2

= ($56 million + $68 million) ÷ 2

= $62 million

And, the net credit sale is $338 million  

Now put these values to the above formula  

So, the answer would be equal to  

= $338 million ÷ $62 million

= 5.45 times