days accounts payable (Days A/P)

  

Definition

The average number of days a company takes to pay its bills, used as a measure of how much it depends on trade credit for short-term financing.

As a rule of thumb, a well managed company's days accounts payable do not exceed 40 to 50 days. Also called days sales in payables. Formula: Average accounts payable x 365 √∑ cost of sales.

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