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Receivables turnover ratio. Receivable turnover ratio or debtor's turnover ratio is an accounting measure used to measure how effective a company is in extending credit as well as collecting debts. The receivables turnover ratio is an activity ratio, measuring how efficiently a firm uses its assets. [1] Formula: A high ratio implies either that ...
In accounting the term debtor collection period indicates the average time taken to collect trade debts. In other words, a reducing period of time is an indicator of increasing efficiency. It enables the enterprise to compare the real collection period with the granted/theoretical credit period. The average collection period (ACP) is the time ...
A financial ratio or accounting ratio states the relative magnitude of two selected numerical values taken from an enterprise's financial statements. Often used in accounting, there are many standard ratios used to try to evaluate the overall financial condition of a corporation or other organization. Financial ratios may be used by managers ...
Logistic analysis was used in building a model for predicting the financial distress of a company. The findings revealed that asset turnover, total asset, and working capital ratio had positive coefficients. On the other hand, inventory turnover, debt-equity ratio, debtors turnover, debt ratio, and current ratio had negative coefficients.
e. In management accounting, the Cash conversion cycle (CCC) measures how long a firm will be deprived of cash if it increases its investment in inventory in order to expand customer sales. [1] It is thus a measure of the liquidity risk entailed by growth. [2] However, shortening the CCC creates its own risks: while a firm could even achieve a ...
In accountancy, days sales outstanding (also called DSO and days receivables) is a calculation used by a company to estimate the size of their outstanding accounts receivable. It measures this size not in units of currency, but in average sales days. Typically, days sales outstanding is calculated monthly. Generally speaking, higher DSO ratio ...
Debtor days. The debtors days ratio measures how quickly cash is being collected from debtors. The longer it takes for a company to collect, the greater the number of debtors days. [1] Debtor days can also be referred to as debtor collection period. Another common ratio is the creditors days ratio.
Days payable outstanding (DPO) is an efficiency ratio that measures the average number of days a company takes to pay its suppliers.. The formula for DPO is: = / / where ending A/P is the accounts payable balance at the end of the accounting period being considered and Purchase/day is calculated by dividing the total cost of goods sold per year by 365 days.