The Accounts Payable Turnover Ratio measures how efficiently a company pays off its suppliers and is calculated by dividing total supplier purchases by the average accounts payable during a period. A higher ratio indicates prompt payments to suppliers, which can enhance supplier relationships, while a lower ratio might suggest liquidity issues or strategic payment delays.

Accounts Payable Turnover Ratio

Efficiently paying off suppliers

total supplier purchases

average accounts payable

prompt payments to suppliers

Supplier relationships are strategic partnerships between a company and its suppliers aimed at fostering collaboration, enhancing supply chain efficiency, and ensuring mutual benefits. Effective management of these relationships can lead to cost savings, improved quality, and innovation, ultimately giving a company a competitive advantage in the market.

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