The Trade Payables Turnover Ratio Can Be Manipulated by Management

question 69

True/False

The trade payables turnover ratio can be manipulated by management through paying off more of their vendors at the end of the year, even though they have been paying late all year, so their ratio would look acceptable.

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Definitions:

Fair Value

An estimate of the market price of an asset or liability, reflecting what a willing buyer would pay a willing seller in an arm's length transaction.

Issue Price

The price at which new shares are offered to the public or bonds are sold, determined at the time of issue.