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3 November, 09:58

Tortoise Inc. Had a cost of goods sold of $43,821. At the end of the year, accounts payable balance was $7,843. How long on average did it take the company to pay off its suppliers during the year? what might a large value for this ratio imply?

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  1. 3 November, 11:52
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    The turnover = Cost of goods sold / Account payable

    = 43,821 / 7,843 = 5,59 times

    Average suppliers pay off = 365/5,59 = 65,2 ~ 66 days

    Explanation:

    Roughly speaking, a large value for this ratio imply that T. I might take a lot of time to pay.
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