Calculating Average Age of Payables (AAP)
- Topics:
- Payables and Receivables
- Tags:
- Accounts Payable,
- Australian Associated Press Pty Ltd.,
- Finance,
- Firm,
- Operational Accounting,
- Payables
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Overview: "This article is about the one of the most important factor of determining the firm's cash cycle is the offsetting benefit derived from the company's accounts payable. Inventory holding period and receivables aging combine to determine the firm's operating cycle, and accounts payable offsets a portion of that operating cycle to determine the cash cycle. A firm with a positive accounts payable balance, therefore, is using spontaneous trade credit (credit from suppliers) to reduce the effect of the operating cycle (AAI + ACP) on the cash cycle of the firm. Different steps were included to calculate Average Age of Payables. To know the method of calculating it refer the article. "
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Format: PDF | Size: 125KB | Date: Apr 2002 | Pages: 3
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