New Click here to Enroll for SIDBI MSME Expert Class by ex-GM, SBI on Nov 24

    Register

    Question

    ABC Ltd’s purchases during the year were Rs 200000. The balance sheet shows an average accounts payable balance of Rs 15000. ABC’s payables period approximately equals to:

    A 37 days Correct Answer Incorrect Answer
    B 28 days Correct Answer Incorrect Answer
    C 44 days Correct Answer Incorrect Answer
    D 13 days Correct Answer Incorrect Answer
    E 23 days Correct Answer Incorrect Answer

    Solution

    Purchases Turnover Ratio = Purchases/ Average Payables i.e: 200000/15000 = 13.33 Payables Payment Period = Number of days in a year/ Purchases Turnover Ratio 365/13.33 = 27.38 ~ 28

    Practice Next

    Relevant for Exams: