Days payable

What is the Days payable?

Days payable counts as Accounts payable divided by Cost of goods sold and multiplied by the number of days in a period. It is not available for banks.

Formula:

Accounts Payable / Cost of goods sold * Days in period

What does the Days payable mean?

Companies with high Days payable have the opportunity to have available funds for short-term investments and increase working capital and free cash flow. It is worth considering that the high values of Days payable may not always be a positive sign.