Creditors’ turnover ratio (Creditors’ velocity): It is similar to debtors ‘Turnover Ratio. It indicates the speed with which the payment for credit purchases are made to the creditors. The ratio can be computed as follows:

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Credit Purchases

——————————————-

Average accounts payable

 

The term Accounts payable include “Trade Creditors” and “Bills payable”

 

In case the details regarding credit purchases, opening closing accounts payable have not been given, the ratio may be calculated as follows:

 

Total Purchases

———————————-

Account Payable

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