This Accounts Payable Excel Template, is an educational resource that highlights where you would find the A/P account on a balance sheet. It gives you an example balance sheet with current assets and current liabilities. Accounts payable is a current liability account that records an outstanding balance that the company has with its suppliers and service providers. The account is also known as unpaid expenses and is recorded when a company purchases from its suppliers on credit. A/P are usually expected to be repaid within either one year or one operating cycle (whichever is longer), and are considered one of the most liquid forms of liabilities of a company. Because A/P represents the unpaid expenses of a company, an increase in A/P will increase the cash balance, all else being equal. When A/P is paid down, the cash balance will also decrease.
Measuring LiquidityAccounts payable turnover and A/P days are some of the most commonly used metric to assess how liquid a company is and analyze its cash cycle. A/P Turnover is a liquidity ratio that measures the number of times a company is able to repay its A/P within a specified period and is given in the following formula: A/P Turnover = Cost of Goods Sold / Accounts Payable A/P Days measures the number of days it takes a company to pay off its A/P balance on average. The formula for calculating the metric is: A/P Days = (Accounts Payable / Cost of Goods Sold) x 365
Learn More About This TopicRead CFI's guide to review the definition, calculation and examples of A/P!