DEFINITION of 'After-Tax Payable Period'

The average period that a company has between receiving goods and paying its suppliers for the goods, utilizing after-tax accounts payable and cost of sales values. The value is generally determined either quarterly or yearly, thereby substituting for N either 90 (for quarterly values) or 365 (for yearly values).


The payable period, or days payable, calculation is:


(average after-tax accounts payable / after tax cost of sales) * N number of days




BREAKING DOWN 'After-Tax Payable Period'

The greater the number of days the company has to pay its suppliers, the more cash the company will have to direct to other working capital needs. This provides an indication of how long the company typically takes to pay its suppliers or creditors. Days payable is also used in the cash conversion cycle; the higher the days payable, the lower the cycle.

RELATED TERMS
  1. Accounts Payable - AP

    Accounts payable (AP) is an accounting entry that's found on ...
  2. Days Payable Outstanding - DPO

    Days payable outstanding measures how long it takes a company ...
  3. Trade Working Capital

    Trade working capital is the difference between current assets ...
  4. Current Liabilities

    Current liabilities are a company's debts or obligations that ...
  5. Accounts Payable Subsidiary Ledger

    An accounts payable subsidiary ledger shows the transaction history ...
  6. After-Tax Return

    An after-tax return is the profit that remains after taxes are ...
Related Articles
  1. Investing

    The Importance Of The Cash Conversion Cycle

    Follow these examples to add cash conversion cycle to your stock analysis toolkit.
  2. Investing

    How to Find Quality Stocks Amid the Wreckage

    Finding companies with good earnings and hitting on all cylinders in this environment, although possible, is not easy.
  3. Investing

    Dynamic Current Ratio: What It Is And How To Use It

    Learn why this ratio may be a good alternative to the current, cash and quick ratios.
  4. Investing

    These 25 Stocks Are Dividend Superstars (NVDA, MA)

    These 25 stocks are dividend superstars, but only four should be on your radar.
  5. Retirement

    How IRA Contributions Affect Your Taxes

    Learn how to work with the tax man to avoid getting gouged when you convert your plans.
  6. Small Business

    In Small Business, Success Is Spelled With 5 "C"s

    Incorporating these steps will help your business thrive in a competitive market.
  7. Investing

    4 Ways Simple Interest Is Used In Real Life

    Simple interest works in your favor when you're a borrower, but against you when you're an investor.
  8. Retirement

    Retirement Plan Tax Form 8606: When To File

    If you have a Roth IRA, you are responsible for keeping track of your pretax versus after-tax assets.
  9. Investing

    Measuring Company Efficiency

    Three useful indicators for measuring a retail company's efficiency are its inventory turnaround times, its receivables and its collection period.
RELATED FAQS
  1. How do accounts payable show on the balance sheet?

    Accounts payable are listed on a company's balance sheet and are considered a short-term debt obligation owed by a company ... Read Answer >>
  2. How are Net Credit Purchases calculated in the accounts payable turnover ratio?

    Find out how to calculate a company's net credit purchases, the figure that makes up the numerator in the accounts payable ... Read Answer >>
  3. What is the difference between an accrual and an account payable?

    Understand the difference between an accrual and an account payable. Learn how an accrual and an account payable affect a ... Read Answer >>
  4. What's the difference between accrued expenses and accounts payable?

    Learn how companies use accrued expenses and accounts payable on their balance sheet and the difference between the two liabilities. Read Answer >>
  5. What factors decrease cash flow from operating activities?

    Understand the types of factors that reduce cash flow from operation activities. Discover how declining net income and efficiency ... Read Answer >>
Hot Definitions
  1. Inflation

    Inflation is the rate at which prices for goods and services is rising and the worth of currency is dropping.
  2. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  3. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  4. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  5. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  6. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
Trading Center