Which of the following indicates the average number of days it takes for a business to pay its creditors?

The correct choice focuses on the creditors turnover, which measures how quickly a business pays off its suppliers, indicating the average number of days it takes to settle these obligations. This turnover ratio is calculated by dividing the total credit purchases by the average accounts payable. The result shows how many times a company pays off its suppliers in a given period, usually a year.

To find the average number of days it takes to pay creditors, you would take the number of days in the period (such as 365 days for a year) and divide it by the creditors turnover ratio. A shorter average payment period may suggest a strong cash position, while a longer period might indicate challenges in cash flow management.

In contrast, the other choices do not measure the payment cycle of creditors. Debtors turnover focuses on how quickly the business collects cash from customers; Cash Flow Cover assesses the relationship between cash flows and current liabilities, and Gross Profit Margin evaluates the profitability of sales relative to the cost of goods sold. Each of these metrics serves a different purpose in analyzing a company's financial health but does not specifically track the average time to pay creditors.