Question

Nelson Company reported cost of goods sold of $550,000 last year and $580,000 this year. Nelson also reported accounts payable of $300,000 last year and $280,000 this year.

Compute this year's accounts payable turnover ratio for Nelson. (Round your answer to 1 decimal place.)

Answer 1

3.00

Step-by-step explanation:

Computation for this year's accounts payable turnover ratio for Nelson

Using this formula

Accounts payable turnover ratio=Cost of goods sold last year - Cost of goods sold this year /(Accounts payable last year -Accounts payable this year) ÷2

Let plug in the formula

Accounts payable turnover ratio=$550,000-$580,000/($300,000+$280,000) ÷2

Accounts payable turnover ratio=$30,000/$20,000÷2

Accounts payable turnover ratio=$30,000/$10,000

Accounts payable turnover ratio=3.00

Therefore this year's accounts payable turnover ratio for Nelson will be 3.00