Days Sales Outstanding to project future Accounts payable
Hey guys,
I just study a model and one thing I never get is how/why to forecast accounts payable. In the model the formula for accounts payable is = (days payable outstanding / 365 * COGS)
I get what days payable outstanding means, it´s just the average number a customer takes to pay his invoice and shows the efficiency of the firm (correct me if I´m wrong).
But why do I take COGS as a multiplicator? Can someone here explain me that fast and simple?
Thank you guys
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