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