RECEIVABLES DAYS: Flashcards
What do recievable days measure
Receivables days measures the amount of time it takes for a business to collect it’s debts - How efficient is a business at managing it’s debt collection (collecting money off of people that owe the business money)
What are receivables
Receivables - Customers that have bought a product, but haven’t paid for it yet
What is the formula for recievable days
= Receivables/ sales revenue X 365
Example of working out recievables
Receivables: £1.3 Million
Sales Revenue: £19.4 Million
Receivables days
= Receivables/ sales revenue X 365
= 1.3/ 19.4 X 365
= 24.5 days
You would round it the day up - So it would be 25 days
What are efficiency ratios
These meausre how effectively a business is managing their assets
What are Payables (creditor) days
Measures the number of days it takes for an organisation to pay their creditors (short term debts)
What is the Payables (creditor) days formula
= Receivables/ sales revenue X 365
What are recievables (debtor) days
Measures the number of days it takes for an organisation to collect debts from customers
What is the formula for recievables days
Recievables/ sales revenue X 365
What is inventory (stock) turnover
This ratio measures the number of times per year an organisation replaces the stock that they sell
What is the formula for inventory turnover
Cost of sales/ inventories
