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Average Payment Period Formula

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Average Payment Period provides insight into a company's efficiency in managing its accounts payable and its relationships with suppliers. Check FAQs

APP = \frac{AAP}{\frac{CP}{No.days}}

APP - Average Payment Period?AAP - Average Accounts Payable?CP - Credit Purchases?No.days - Number of Days in Period?

Average Payment Period Example

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Here is how the Average Payment Period equation looks like with Values.

Here is how the Average Payment Period equation looks like with Units.

Here is how the Average Payment Period equation looks like.

17.6875 = \frac{28300}{\frac{48000}{30}}

17.6875 = \frac{28300}{\frac{48000}{30}}

17.6875 = \frac{28300}{\frac{48000}{30}}

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Average Payment Period Solution

Follow our step by step solution on how to calculate Average Payment Period?

FIRST Step Consider the formula

APP = \frac{AAP}{\frac{CP}{No.days}}

Next Step Substitute values of Variables

∴

APP = \frac{28300}{\frac{48000}{30}}

Next Step Prepare to Evaluate

∴

APP = \frac{28300}{\frac{48000}{30}}

LAST Step Evaluate

∴

APP = 17.6875

Average Payment Period Formula Elements

Variables

Average Payment Period

Average Payment Period provides insight into a company's efficiency in managing its accounts payable and its relationships with suppliers.

Symbol: APP

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Average Payment Period

Average Accounts Payable

Average Accounts Payable is a financial metric that represents the average amount of money a company owes to its suppliers or vendors over a specific period.

Symbol: AAP

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Average Accounts Payable

Credit Purchases

Credit Purchases refer to goods or services that a company acquires from suppliers or vendors on credit.

Symbol: CP

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Credit Purchases

Number of Days in Period

Number of Days in Period refers to the total number of days that a specific time frame or reporting period encompasses.

Symbol: No.days

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Number of Days in Period

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How to Evaluate Average Payment Period?

Average Payment Period evaluator uses Average Payment Period = Average Accounts Payable/(Credit Purchases/Number of Days in Period) to evaluate the Average Payment Period, The Average Payment Period is a financial metric that measures the average number of days it takes for a company to pay its suppliers or vendors after receiving goods or services. Average Payment Period is denoted by APP symbol.

How to evaluate Average Payment Period using this online evaluator? To use this online evaluator for Average Payment Period, enter Average Accounts Payable (AAP), Credit Purchases (CP) & Number of Days in Period (No.days) and hit the calculate button.

FAQs on Average Payment Period

What is the formula to find Average Payment Period?

The formula of Average Payment Period is expressed as Average Payment Period = Average Accounts Payable/(Credit Purchases/Number of Days in Period). Here is an example- 17.6875 = 28300/(48000/30).

How to calculate Average Payment Period?

With Average Accounts Payable (AAP), Credit Purchases (CP) & Number of Days in Period (No.days) we can find Average Payment Period using the formula - Average Payment Period = Average Accounts Payable/(Credit Purchases/Number of Days in Period).

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Average Payment Period Formula

Average Payment Period Example

Average Payment Period Solution

Average Payment Period Formula Elements

Other formulas in Debt Management category

How to Evaluate Average Payment Period?

FAQs on Average Payment Period

Variable Name