Accounts Payable Turnover and The Debt-assets Ratio of Hershey Company

ACCOUNTING
Name
Institution
Date
* EFFICIENCY
Hershey Company
Suggested Format

2017

2016

2015

Accounts Payable Turnover

7.73

8.58

8.27

Days Payable Outstanding

47

42

44

Bridgford Food.
Suggested Format

2017

2016

2015

Accounts Payable Turnover

22.13

17.49

13.86

Days Payable Outstanding

16

21

26

Accounts Payable Turnover Ratio = Net Credit purchases/ average accounts payable
Annual Purchases = CGS + ending inventory – beginning inventory
2017 net credit purchases =CGS -Ending inventory +Beginning inventory
4,070,907.00 +752,836.00 -745,678.00= 4,276,998.00
Average accounts payable is (522,536.00 +532,229.00/ 2) = 527,382.50
4,276,998.00 / 527, 382.50= 7.73 times
Hershey Company has lower accounts payable turnover compared to the competitor, but this increased from 8.27 in 2015 to 8.58 n 2016, and then fell to 7.73 in 2017. Accounts payable are necessary to main a good relationship between the suppliers and the business (Weil, Schipper & Francis, 2013). The ratio indicates the ability to off the accounts payable (creditors or suppliers). A high accounts payable turnover indicates that the company has a relatively shorter time between purchase and payment for the goods and services The days payable outstanding is calculated 365/ accounts payable turnover and Hershey company this was 44.14 in 2015, and reduced to 42.53 and then inc...