AVERAGE DAYS PAYABLES
CONDITION
| Year : | 2006 |
| Your ratio : | 25.09 |
| Industry Avg : | 17.46 |
| Cost Of Goods Sold : | $424,970 |
| Trade Payables : | $0 |
| Account Patables : | $29,202 |
GRAPH
AVERAGE DAYS PAYABLES
This indicator demonstrates how quickly you are paying your bills by revealing the average length of your payables period. Ideally, the average payables period will be consistent with your credit terms. Trade vendors are likely to offer a discount for early payment. For Example, "2/10 net 30" offers you a 2% discount of the invoiced amount for paying within 10 days. Paying early is often mutually beneficial to you and the vendor. You save on the amount paid and the vendor collects sooner. In this case, he gets paid 20 days sooner. Since A rule of thumb is to take the discount and pay early if the interest rate you can earn on this "loan" is greater than your cost to borrow.
Measures the average number of days it takes to pay supplier. The Days in the Period is the number of days in the measurement period, mormally 365, Average Accounts Payables is the average of the opening and closing balances of Accounts Payables for the measurement peiod.
The perfomance of this ratio versus your peers indicates that you need to improve the timeliness of your bill paying. Continuing to stay in the "orange zone" may impair the company's credit and borrowing capability. Continued late payments over time will impact cash flow and payment terms. Consider discussing your need with your banker or creditor for assistance.