How quickly a company pays its suppliers. Lower turnover conserves cash. Very low turnover may strain supplier relationships. Compare to receivables turnover for a complete working capital picture.
Formula
Description
Measures how quickly a company pays its suppliers. Lower payables turnover means the company takes longer to pay, conserving cash. However, extremely low turnover may strain supplier relationships. It is the inverse of DPO expressed as a ratio.
Interpretation
Below 12 is generally favorable for cash management. Very low payables turnover (below 4) may indicate the company is stretching payments too far. Rising turnover means the company is paying faster, which reduces working capital efficiency.
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