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Why over-trading may result in a relatively high accounts payable turnover period?
In future if you want me to answer then you must ask in the Ask the Tutor Forum – this forum is for students to help each other 🙂
Because over-trading is likely to lead to a shortage of cash and therefore forces a delay on paying liabilities.
Have you watched my free lectures on this.
Thanks Sir. I got it.
I have watched the video. My thought just stick to the formula.
payable turnover period = (payable/ cost of sale) * 365
I was just thinking if company over-trading, revenue increased then COS of course also increased and payable increased as well so finally dont know weather payable turnover period is increased?
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