Meaning and calculation
Accounts payable turnover relates the volume of purchases to the average amount owed to suppliers. An analytical calculation uses comparable purchases for the period and average trade payables. Cost of sales is sometimes used instead of purchases, but that proxy can distort the result when inventory or the cost structure changes materially.
If assumed annual purchases are 800 thousand roubles and average amounts owed to suppliers are 200 thousand, the ratio is 4. This figure alone does not say whether the company is breaching payment terms: contractual due dates and overdue-payment data are needed for that.
Limits of interpretation
Low turnover may reflect a favorable, agreed payment deferral or a forced delay in payments. High turnover may indicate quick settlement or weak bargaining power. Do not include bank debt in trade payables without explanation. To assess the operating cycle, consider the ratio alongside inventory and accounts receivable, using the same time scale. Related reading: [working capital](/guides/working-capital/), [accounts payable](/glossary/kreditorskaya-zadolzhennost/) and [turnover ratios](/glossary/oborachivaemost/).