AVERAGE PAYMENT PERIOD Definition

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AVERAGE PAYMENT PERIOD (APP) is the number of days an entity takes to pay off credit purchases. As the average payment period increases, cash should increase as well, but working capital will remain the same. Formula: accounts payable / (total annual purchases / 360).

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VARIABLE INTEREST RATE is an interest rate that moves up and down based on the changes of an underlying interest rate index, e.g. a credit card might have a variable rate that is a certain spread over the prime rate.

LIQUIDATOR is a person appointed by a court of law or unsecured creditors who liquidates assets or preserves them for the benefit of affected parties.

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