The effectiveness of the company is determined by a whole range of calculated indicators involved in the analysis of production activities. 
One of them is accounts payable turnover, which determines the rate at which an organization repays its obligations to firms and individuals who have supplied goods or services. Consider the algorithm for calculating this indicator and find out what role it plays in the analytical work of the company and how it affects production activities.
Accounts payable turnover: what does the term mean
An experienced economist knows that without a proper calculation of the rate of repayment of own debts of a company, it is difficult to predict further positive development, therefore much attention is paid to the analysis of accounts payable in any organization. This is not surprising, because in a stable operating enterprise, the interaction of all production structures includes a large block of financial operations, the result of which is the emergence of debt to other counterparty enterprises. 
The task of a competent leader is to set up production in such a way as to repay arising debts as quickly as possible. This stimulates the development of activities, while increasing the business reputation of the company and attracting potential suppliers of services or goods to cooperation. Thus, it is simply necessary to calculate the turnover of accounts payable and compare the obtained indicators with previous reporting periods in order to maintain the efficiency and stability of any production, as well as to take timely measures in case of negative moments.
Who acts as a creditor
Objects creditor may be:
- suppliers of goods, components and other property, as well as service companies that provide utilities and the supply of heat, water and energy;
- government organizations represented by budgetary / extra-budgetary funds regarding taxes and duties;
- banks / credit organizations;
- company staff - at payroll.
Indicator value
Accounts payable turnover is determined by the speed of a company covering debts incurred before service / product providers. The coefficient indicates how many times in the reporting period the company paid off the average size of its own liabilities.
The accounts payable turnover ratio is associated with credit risks (when using borrowed funds), therefore, it indirectly estimates the solvency and liquidity of the company. Its growth in comparison with the indicators of the previous period means an increase in the speed of settlement of obligations, a decrease - a certain delay in paying debts to creditors, which will require a deeper analysis to clarify the situation.
Accounts payable turnover: calculation formula
The indicator is calculated as the ratio of the value of acquired assets to the average amount of debt to creditors for the period under review. The formula is as follows:
TOCZ = P / SCZwhere
TOCZ - payable turnover ratio at times,
P - purchases,
WITHCZ - the average amount of debt to creditors, which is found as half the amount of debt to creditors at the beginning and end of the analyzed period.
The value of “Purchase” is not contained in the financial statements, it is calculated by the formula:
P = CP + 3n-3towhere CP - cost of sales, Wn and Zto - the size of stocks at the beginning and end of the period under review. Russian economists often use a more conventional calculation option, replacing the calculation of the volume of purchases with a revenue indicator.
How to calculate the coefficient in days
In addition to calculating the coefficient in times, it is necessary to establish the turnover of accounts payable in days:
TOcr.z / day = 360 / KCZwhere 360 is the number of days in a year. For other time periods, the number of days in them is used. The formula can be used as an indicator of the total number of days in a year, ie 365. The number 360 includes the number of effective days, since 30 is taken as the number of days to simplify the calculation.
The result of the calculations is the determination of the average number of days during which settlements with creditors are not carried out and bills are not paid.
What the indicator says
Despite the fact that an increase in the ratio is an indicator of increasing the efficiency of the company and liquidity, its sharp rise will indicate a decrease in production profitability, because according to the golden rule of an economist, an increase in liquidity reduces profitability.
An analysis of accounts payable turnover will be incomplete if it is carried out without assessing the dynamics of accounts receivable turnover. The actual state of affairs in the company will be clarified by comparing these two indicators: a positive moment is the excess of accounts payable turnover ratio over the indicator for settlements with debtors. 
This factor increases the profitability of the company, therefore, in circulation the organization has more financial resources to expand production or other activities.
Normative
There is no fixed normative value for this coefficient, since it is too dependent on the industry, scale and nature of activity. Usually its conditional value is developed separately by industry with a focus on the most successful companies. Therefore, to conduct a qualitative analysis of the dynamics of accounts payable dynamics, it is important to calculate its value in the industry as a whole, as well as for companies leading in it. Subsequently, the analyst-economist this information provides invaluable assistance and becomes a necessary guide in conducting financial analysis.
