Payables
(Accounts Payable).
Formula
Payables Days = (Payables ÷ Cost of Sales) × 365
Real World
Tesco is famous for negotiating extended payment terms with suppliers — sometimes 60–90 days — meaning it sells goods to customers before it pays the supplier, boosting its cash position.
Exam Focus
Distinguish payables (money owed to suppliers) from receivables (money owed to the business) — mixing these up is a frequent error.
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