What is the formula for calculating Account Payable Turnover?

The formula for calculating Accounts Payable Turnover is indeed derived from the relationship between goods purchased and accounts payable. Specifically, the Accounts Payable Turnover ratio measures how quickly a company pays off its suppliers and is calculated by dividing the total amount of goods purchased (or cost of goods sold) by the average accounts payable. This ratio is crucial for understanding a company's efficiency in managing its payment obligations.

When the value of goods purchased is divided by accounts payable, it gives insight into how effectively the company is utilizing its credit from suppliers. A higher turnover rate indicates that the company is paying its suppliers quickly, while a lower rate may suggest that it is taking longer to pay, which could lead to strained supplier relationships or increased financing costs.

The other options do not pertain to the correct calculation for Accounts Payable Turnover, as they either relate to different financial metrics or represent incorrect relationships between financial components. Therefore, the correct formula that aligns with the definition and purpose of Accounts Payable Turnover is indeed represented by the choice that divides goods purchased by accounts payable.