The accounting ratio used to measure the average number of days for which suppliers remain unpaid is
-
A.
stock turnover -
B.
creditor’s payment period -
C.
debtors collection period -
D.
return on capital employed
Correct Answer: Option B
Explanation
The Creditor (or payables) days number is a similar ratio to debtor days and it gives an insight into whether a business is taking full advantage of trade credit available to it. Creditor days estimates the average time it takes a business to settle its debts with trade suppliers.