Creditors Payment Period (or Payables Turnover Ratio,Creditor days) is a term that indicates the time (in days) during which remain current current liabilities outstanding (the enterprise use free trade credit).
Calculation of Creditors Payment Period
Creditors Payment Period = Trade creditors / credit purchases Number of days)
For what to use the Creditors Payment Period in practice?
An indicator measures the average time it takes a company to settle its debts with trade suppliers (accounts payable). Thus, among other things, it gives information about payment habits and also whether a business is taking full advantage of trade credit available. In other words if we do not pay too soon.