Numbers of Days Payable

[LePetitCaporal]

Hello,
There is something I don’t understand.
- When you look at “Numbers of Days Payable” in Volume 3 - Financial Analysis - page 321 it says:
Numbers of Days Payable = Number of days in period / Paybles turnover
- When you look at “Numbers of Days Payable” in Volume 4 - Corporate Finance - page 140 it says:
Numbers of Days Payable = Account Paybles / (Purchases/ 365)

Can someone explain that to me please?
Thanks a lot for your help.

 

[inCLYNEd.Honoka]

Basically, they just combined the formula.
Payables turnover = (Purchases)/Average Payables
No. of Days Payable = 365/Payables Turnover
or
365/(Purchases/Average Payables) = 365 * (Average Payables/Purchases) = AP/Purchases ÷ 1/365 = AP/(Purchases/365)
You get the convoluted idea.

 

[suspense]

NDP=AP/(P/365)
If you open the bracket you’ll get
NDP=AP÷P/365
=AP×365/P
=365×AP/P
But payable turnover= P/AP
so
NDP=365×(1/PT)
NDP=365/PT
you can see both formula are the same.
NDP= number of days payable
AP = average payable
P = purchase
PT = payable turnover
I do hope you get it

 

[LePetitCaporal]

Great! Thanks a lot to both of you!

 

[inCLYNEd.Honoka]

LePetitCaporal wrote:
Great! Thanks a lot to both of you!

You’re welcome~

 

[suspense]

LePetitCaporal wrote:
Great! Thanks a lot to both of you!

You are welcome