How To Calculate Accounts Payable Turnover in Salesforce | Arithmix

Accounts payable turnover is an important financial metric that measures how efficiently a company is managing its accounts payable. It is a key indicator of a company's financial health and can help identify potential cash flow problems. In this article, we will discuss what accounts payable turnover is, when it is valuable to calculate it, and how to calculate it in Salesforce.

What Is Accounts Payable Turnover?

Accounts payable turnover is a financial ratio that measures the number of times a company pays off its accounts payable during a given period. It is calculated by dividing the total cost of goods sold by the average accounts payable balance during the same period. The formula for accounts payable turnover is:

Accounts Payable Turnover = Cost of Goods Sold / Average Accounts Payable Balance

The result is a ratio that indicates how many times a company pays off its accounts payable in a given period. A high accounts payable turnover ratio indicates that a company is paying off its debts quickly, while a low ratio indicates that a company is taking longer to pay off its debts.

When Is It Valuable To Calculate Accounts Payable Turnover?

Calculating accounts payable turnover is valuable for several reasons. First, it can help identify potential cash flow problems. If a company has a low accounts payable turnover ratio, it may indicate that the company is struggling to pay off its debts and may be at risk of running out of cash. Second, it can help identify inefficiencies in a company's accounts payable process. If a company has a low accounts payable turnover ratio, it may indicate that the company is not managing its accounts payable effectively and may need to improve its processes.

How to Calculate Accounts Payable Turnover in Salesforce

Salesforce is a cloud-based accounting software that can help you calculate accounts payable turnover. Here's how:

1. Log in to your Salesforce account and navigate to the "Reports" section.
2. Select "Accounts Payable" from the list of available reports.
3. Select the date range for the report and click "Generate Report."
4. Find the "Accounts Payable Turnover" ratio in the report.
5. Use the formula above to calculate the accounts payable turnover ratio for your business.

By following these steps, you can easily calculate your accounts payable turnover ratio in Salesforce and use it to improve your business's financial health.

How Do You Calculate Accounts Payable Turnover in Salesforce

Salesforce 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 Salesforce and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers you'll powerful yet easy to use. With Arithmix you can import data from systems like Salesforce, 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 Salesforce 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 Salesforce 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.