Average Accounts Payable

Definition: Average Accounts Payable is the simple arithmetic average of beginning and ending Accounts Payable for a reporting period: (Beginning AP + Ending A…

Average Accounts Payable is the simple arithmetic average of beginning and ending Accounts Payable for a reporting period: (Beginning AP + Ending AP) / 2. It is the denominator of the Payables Turnover ratio (Cost of Goods Sold / Average AP, or more precisely Net Credit Purchases / Average AP) and Days Payable Outstanding (DPO).