The A/P Days Calculation is an accounting measurement used by businesses to determine how much to set aside for accounts payable. It is a ratio that compares the average account payable balance with the average accounts receivable (A/R) balance over a period of time. By using it, a business can keep track of its cash flow on a daily basis and know how much it needs to pay its accounts payable bills, and how much it needs to set aside for future collections from its customers.
In order to calculate your A/P Days, you will need a few pieces of information: -Average A/R days -Average A/P days -Accounts Receivable Balance -Accounts Payable Balance