Payables deferral period
Payables deferral period is the average length of time between a firm's purchase of materials and labor and the payment of cash for them. It is calculated by dividing accounts payable by credit purchases per day (i.e., cost of goods sold ÷ 365).
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Payables deferral period. The average length of time between a firm's purchase of materials and labor and the payment of cash for them. It is calculated by dividing accounts payable by credit purchases per day (i.e., cost of goods sold ÷ 365).
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
