Days Accounts Payable (Days A/P)
This is the average number of days a company takes to pay its bills, used as a measure of how much it depends on trade credit for short-term financing. As a rule of thumb, a well-managed company's Days Accounts Payable do not exceed 40 to 50 days. It is also called days sales in payables.
Calculated as: Average accounts payable x 365 ÷ cost of sales