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i'm really confused by this ratio. Basically it rewards companies for allowing their accounts payables to exceed their scheduled payment dates. if you have a company that has no short term debt then it is pretty hard to get a flowie below 1.25. i,m not sure i agree that a company is managing its cash correctly by allowing payables to be paid out slowly. as the owner of a private company, my survival depends on my vendors and their willingness to ship raw materials to me depends greatly on my on time payments. one of the reasons a lot of companies don't want to sell to walmart is that they dictate when they are going to pay which is usually 120 days plus. now the fool claims that walmart is an industry leader for being able to do this and is managing their cash correctly, but i don't agree. hopefully, you can explain this reasoning to me or is there something i am not understanding? thank you
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