# How To Calculate Accounts Payable Turnover in Acumatica | Arithmix

Learn how to calculate accounts payable turnover in Acumatica with our step-by-step guide. Improve your financial analysis and make informed decisions for your business.

Calculating accounts payable turnover is an important aspect of managing your business's financial health. It helps you understand how efficiently your company is paying off its debts to suppliers and vendors. While there are different ways to calculate accounts payable turnover, the most common method is to divide the total cost of goods sold by the average accounts payable balance during a given period. Here's how you can do it:

1. First, determine the total cost of goods sold (COGS) during the period you want to measure. This includes all the direct and indirect costs associated with producing and delivering your products or services.
2. Next, calculate the average accounts payable balance during the same period. This is the sum of the beginning and ending accounts payable balances divided by two.
3. Finally, divide the COGS by the average accounts payable balance to get the accounts payable turnover ratio.

For example, if your company had a COGS of \$500,000 and an average accounts payable balance of \$100,000 during a year, the accounts payable turnover ratio would be 5. This means that your company paid off its accounts payable balance five times during the year.

## What Is Accounts Payable Turnover?

Accounts payable turnover is a financial ratio that measures how quickly a company pays off its accounts payable balance to suppliers and vendors. It is an important metric for evaluating a company's liquidity and financial health. A high accounts payable turnover ratio indicates that a company is paying off its debts quickly, which can be a sign of good financial management. On the other hand, a low accounts payable turnover ratio may indicate that a company is struggling to pay off its debts, which can be a red flag for investors and creditors.

Accounts payable turnover is also useful for comparing a company's performance to its industry peers or competitors. Different industries may have different average accounts payable turnover ratios, so it's important to benchmark your company's performance against similar companies in your industry.

## When Is It Valuable To Calculate Accounts Payable Turnover?

Calculating accounts payable turnover is valuable for any business that wants to stay on top of its financial health. It can help you identify areas where you can improve your cash flow, negotiate better payment terms with suppliers, and manage your working capital more effectively. Here are some specific situations where calculating accounts payable turnover can be particularly valuable:

• When you're evaluating the financial health of your business: Accounts payable turnover is one of several financial ratios that can help you assess the overall health of your business. By calculating this ratio, you can get a better understanding of how efficiently your company is managing its debts and cash flow.
• When you're negotiating payment terms with suppliers: If you have a high accounts payable turnover ratio, you may be able to negotiate better payment terms with your suppliers. For example, you may be able to get a discount for paying your bills early or negotiate longer payment terms to improve your cash flow.
• When you're looking to improve your cash flow: Calculating accounts payable turnover can help you identify areas where you can improve your cash flow. For example, if you have a low accounts payable turnover ratio, you may need to improve your collections process or negotiate better payment terms with your customers to improve your cash flow.

Overall, calculating accounts payable turnover is a valuable tool for any business that wants to stay on top of its financial health and improve its cash flow management. By understanding this ratio and how to calculate it, you can make better financial decisions and position your business for long-term success.

## How Do You Calculate Accounts Payable Turnover in Acumatica

Acumatica itself isn’t naturally geared towards letting you calculate complex metrics like Accounts Payable Turnover. As an alternative, teams typically use products like Arithmix to import data from Acumatica and build out dashboards.

## What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Acumatica, combine it with data from other systems, and create calculations like Accounts Payable Turnover.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

## Calculating Accounts Payable Turnover in Arithmix

Calculating metrics like Accounts Payable Turnover is simple in Arithmix. Once you've created your free account, you’ll be able to import your Acumatica data, and use it to create natural language formulas for metrics like Accounts Payable Turnover.

Arithmix is designed to give you the power to build any calculations you want on top of your Acumatica data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.