Question

ABC Ltd has made purchases of Rs.100,000 during the year. The balance sheet shows an average accounts payable balance of Rs12,000. ABC Ltd payable payment period is closest to:

A 37 days Correct Answer Incorrect Answer
B 44 days Correct Answer Incorrect Answer
C 52 days Correct Answer Incorrect Answer
D 45 days Correct Answer Incorrect Answer
E 25 days Correct Answer Incorrect Answer

Solution

           Payables Turnover = Purchases/ average payables = 100000/12000             8.33             Payables payment period = 365/8.33 = 43.8 ~ 44 days

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