
Explanation:
The payables turnover ratio is calculated as Purchases divided by Average Trade Payables. Here, Cost of Sales is used as a proxy for Purchases. The calculation is as follows:
This ratio measures how efficiently a company pays its suppliers, with higher values indicating more frequent payments. The assumption is that all purchases are made on credit.
An analyst collects the following financial data (in € thousands) for a company: Year 2 Year 1 Revenue 2,400 2,000 Cost of sales 1,800 1,400 Ending accounts payable 180 220 Based solely on this information, the payables turnover ratio for Year 2 is closest to:
A
9
B
10
C
12
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