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2 cards from this section. Quick, good the night before a test.
What is the formula for calculating the Debtors Turnover Ratio?
Think about what two financial figures you need to compare.
What does a higher Debtors Turnover Ratio indicate?
Consider what collecting debts quickly means for a business.
What is the Debtors Turnover Ratio used for?
Consider what the ratio specifically measures.
True or False: A higher Debtors Turnover Ratio indicates less efficient debt collection.
Think about the efficiency implied by the higher number.
A company has debts of ₹300,000 and collects ₹60,000 monthly. Based on the Debtors Turnover Ratio, calculate how long it takes to collect all debts.
Think about how many months it will take.
If the average trade debtor is ₹120,000 and the Debtors Turnover Ratio is 6, what are the net credit sales?
Rearrange the formula to find the missing variable.
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