Debtor days

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 days debtors.[1] Debtor days can also be referred to as Debtor collection period.

Definition

\mbox{Debtor days} = \frac {\mbox{Year end trade debtors}} {\mbox{Sales}} \times {\mbox{Number of days in financial year}}

or

\mbox{Debtor days} = \frac {\mbox{Average trade debtors}} {\mbox{Sales}} \times {\mbox{Number of days in financial year}}

when

\mbox{Average trade debtors} = \frac {\mbox{Opening trade debtors} + \mbox{Closing trade debtors}} {\mbox{2}}

See also

  • [[]]

References

  1. ^ Financial Management: Management Extra. Elsevier. 2005. pp. 92. ISBN 0750666870. 

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