When getting the beginning and ending balances, set first the desired accounting period for analysis. To illustrate how to compute the A/P turnover, let’s assume the following data:Īdd the beginning and ending balance of A/P then divide it by 2 to get the average.Īverage A/P = ($2,000 + $3,000) / 2 = $2,500 You may check out our A/P best practices article to learn how you can efficiently manage payables and stay fairly liquid. You may compare month-to-month or year-over-year A/P turnovers to spot seasonalities and normal occurrences in business operations.Ī/P management is one of the most important bookkeeping responsibilities.
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