What is a high creditors turnover ratio?

What is a high creditors turnover ratio?

A high AP turnover ratio shows suppliers and creditors that the company has the working capital to pay its bills frequently and can be used to negotiate favorable credit terms in the future. Essentially, a high accounts payable turnover ratio indicates high creditworthiness.

Is higher creditor turnover ratio better?

A higher ratio is a good sign, as it means a business is paying off its debts more quickly. For businesses considering whether or not to trade with a particular partner, taking a look at the creditors turnover ratio is an important step.

What does creditors turnover indicate how is it calculated should it be higher or lower?

The accounts payable turnover ratio measures how quickly a business makes payments to creditors and suppliers that extend lines of credit. Accounting professionals quantify the ratio by calculating the average number of times the company pays its AP balances during a specified time period.

What does a creditors to stock ratio below 1 indicate?

A less than 1 ratio indicates that the portion of assets provided by stockholders is greater than the portion of assets provided by creditors and a greater than 1 ratio indicates that the portion of assets provided by creditors is greater than the portion of assets provided by stockholders.