Question

You have been provided with the following information from the balance sheets and income statements of Batchawana Inc. (Batchawana). Accounts payable and inventory are from the balance sheet as of
December 31 of the stated year and cost of sales is for the stated year ended December 31. Assume that all purchases of inventory are made on credit and cost of sales includes only the cost of inventory sold.


Required:
a. Calculate the accounts payable turnover ratio for 2017, 2016, and 2015.
b. Calculate the average payment period for accounts payable for 2017, 2016, and 2015.
c. Interpret your results from (a) and (b).
d. What circumstances could explain a declining accounts payable turnover ratio (or increasing average payment period for accountspayable)?


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  • CreatedFebruary 26, 2015
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