Payment
Period to Average Inventory Period = payment period /
average inventory period
A payment
period to average inventory period above 1:1 (100%)
indicates that the inventory is sold before it is paid
for (inventory does not need to be financed).
(the average inventory period is also known as the
inventory holding period)
The average
inventory period, payment period
and payment period to average inventory period ratios
are included in the financial statement ratio
analysis spreadsheets highlighted in the left column,
which provide formulas, definitions, calculation, charts
and explanations of each ratio.
The payment period to average inventory period ratio
is listed in our efficiency
ratios.
| The payment period to
average inventory period ratio and other ratios are key
to understanding financial statements. Our
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See list
of ratios , or the financial statement ratio
analysis spreadsheets which are not highlighted in the
left column, to see which other ratios are calculated
and explained in our spreadsheets.
The payment period to
average inventory period ratio may be included
in our
custom 1, 3 or 5 period financial
statement ratio analysis spreadsheet.
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