what the ap turnover ratio can tell you
the accounts payable turnover ratio shows investors how many times per period a company pays its accounts payable in other words the ratio measures the speed at which a company pays its suppliers investors can use the accounts payable turnover ratio to determine if a company has enough cash or revenue to meet its short term obligations creditors can use the ratio to measure whether to extend a line of credit to the company measured over time a decreasing figure for the ap turnover ratio indicates that a company is taking longer to pay off its suppliers than in previous periods this could signal that a company is in financial distress alternatively a decreasing ratio could also mean the company has negotiated different payment arrangements with its suppliers 