Trade Payables
Amounts a company owes to suppliers for goods or services already received but not yet paid for.
Formula
Creditor Days = Average Trade Payables / Cost of Goods Sold x 365
Unit
₹ crore
In depth
Trade payables are interest-free funding from suppliers, so stretching them improves cash flow at no financing cost — up to the point where suppliers begin demanding advance payment or raising prices. A sudden lengthening of creditor days is therefore ambiguous: it may signal bargaining power, or it may signal that the company cannot pay. In India, the MSME rules require disclosure of amounts overdue to small suppliers, and that specific line is a useful check on which explanation applies. Payables are subtracted in the cash conversion cycle, so a business can run negative working capital by collecting before it pays.
Worked example
COGS ₹600 crore with average payables of ₹130 crore gives creditor days = 130 / 600 x 365 = 79 days. Combined with 97 inventory days and 80 debtor days, the cash conversion cycle is 97 + 80 - 79 = 98 days of funding required.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Trade Payables” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.