RiskFCFF#117
Payables Turnover is the metric used to the financial stress or solvency profile of the business.
By Javier Sanz, Founder & Lead AnalystEditorially reviewed
Last updated: Reviewed by: Javier Sanz
Formula
NOPAT + Depreciation & Amortization − CapEx − ΔWorking Capital
Description
Free Cash Flow to the Firm measures the total cash available to all capital providers (both debt and equity holders) after operating expenses and reinvestment. Unlike FCF to equity, FCFF is capital-structure neutral and gives a clearer picture of the business's cash-generating power.
Interpretation
Positive and growing FCFF signals a healthy business. Negative FCFF may be acceptable for high-growth companies investing heavily, but persistent cash burn is a red flag. Compare to enterprise value for a capital-structure-neutral valuation metric.
Related metrics: Beta (Market Sensitivity), 52-Week Price Volatility. (Updated 2026)
Further Reading
- SEC EDGAR primary filings on Payables Turnover- Primary source filings used to calculate Payables Turnover.
FAQ
How is Payables Turnover calculated?+
Payables Turnover uses the formula: NOPAT + Depreciation & Amortization − CapEx − ΔWorking Capital. compare against sector median on /screener with the Sector filter applied. ValueMarkers refreshes the calculation within 24 hours of each new SEC filing using SEC EDGAR balance-sheet + cash-flow statements.
What is a good Payables Turnover value by sector?+
There is no single 'good' value for Payables Turnover — context is sector-driven. compare against sector median on /screener with the Sector filter applied. The /screener exposes sector-relative percentiles for Payables Turnover on every ticker, so you can compare against the sector median rather than the broad-market median.
Which investors use Payables Turnover?+
Howard Marks, Seth Klarman, Bill Ackman in distressed scenarios cite Payables Turnover as a key input to to flag solvency stress and avoid permanent capital loss. The academic anchor is Altman (1968) Z-Score and Piotroski (2000) F-Score. ValueMarkers weights this within the Risk pillar of the VMCI score (8% of total).
What are the limitations of Payables Turnover?+
Payables Turnover can mislead in asset-heavy industries where leverage ratios understate true risk. Pair Payables Turnover with at least two cross-checks from other VMCI pillars — for example, free cash flow trend, balance-sheet quality, and earnings consistency — before drawing a single-metric conclusion.
Where can I see live Payables Turnover data?+
Visit any /stock/[ticker] page on ValueMarkers to see live Payables Turnover data, sector percentiles, and the VMCI composite score that integrates Payables Turnover with 119 other indicators across 100,000+ stocks. The free /screener exposes Payables Turnover as a filterable column.
Used in these guides
Related Risk Indicators
Beta (Market Sensitivity)GM Trend
Beta is the metric used to the financial stress or solvency profile of the business.
52-Week Price VolatilityNM Trend
52-Week Price Volatility measures the financial stress or solvency profile of the business.
Maximum Drawdown 1Y (Max Drawdown)ROIC Min 5Y
Maximum Drawdown 1Y expresses the financial stress or solvency profile of the business.
Free Cash Flow to Enterprise (FCF to Firm)EQ
Free Cash Flow to Enterprise captures the financial stress or solvency profile of the business.
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