9.To find the days’ sales in payables, we first need to find the payables turnover. The payables turnover was:
Payables turnover = Cost of goods sold / Payables balance
Payables turnover = $59,382 / $13,689
Payables turnover = 4.34 times
Now, we can use the payables turnover to find the days’ sales in payables as:
Days’ sales in payables = 365 days / Payables turnover
Days’ sales in payables = 365 days / 4.34
Days’ sales in payables = 84.14 days
The company left its bills to suppliers outstanding for 84.14 days on average. A large value for this ratio could imply that either (1) the company is having liquidity problems, making it difficult to pay off its short-term obligations, or (2) that the company has successfully negotiated lenient credit terms from its suppliers.