A financial health indicator that measures the number times the company has paid its average accounts payable balance within a fiscal year. This ratio is calculated by dividing purchase made by a company by the average accounts payable balance (i.e. average of accounts payable at the beginning of the period and at the end of the period). Ideally the resulting ratio should be less than six to demonstrate that the company has the ability to pay its bills. Classified as an activity ratio.
