Normally if we have to find inv or payable days We calculate like this Inv days = inventory / cost of sales ×365 Pay days = payables / cost of sales ×365 Sometimes there are credit purchases given which we can use instead of cost of sales Now this has been a problem because most probably they use cost of sales for both inv and pay days but i have done a question in kaplan where they used credit purchases How do we figure this out what to use ?
As I explain in my free lectures, it depends on the information available. We should be using credit purchases but often this is not available and so we have no choice but to use the cost of sales.