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Avg Collection Period increases.
Average Colection period: Accounts Receivables divided by Average daily credit sales
Debt Collection Period ratio, is the year's sales which were outstanding at the balance sheet date, expresse in days. A rough measure of the days of credit that a firm's offers to its suppliers/clients. The formula is as follows: = (average debtors / turnover) * 365 Debt Collection Period ratio, is the year's sales which were outstanding at the balance sheet date, expresse in days. A rough measure of the days of credit that a firm's offers to its suppliers/clients. The formula is as follows: = (average debtors / turnover) * 365
The creditors' payment period is an activity ratio. It measures the average amount of days the business takes to pay its creditors i.e. suppliers. The more days available to pay the better.
This ratio looks at how long it takes for the business to get back the money it is owned. Average collection period for accounts receivable reveals the average number of days it takes for a company to collect its credit accounts from its customers. Therefore, a business prefers a shorter average settlement period. The number of days has been same in both the years.
This ratio looks at how long it takes for the business to get back the money it is owned. Average collection period for accounts receivable reveals the average number of days it takes for a company to collect its credit accounts from its customers. Therefore, a business prefers a shorter average settlement period. The number of days has been same in both the years.
This ratio looks at how long it takes for the business to get back the money it is owned. Average collection period for accounts receivable reveals the average number of days it takes for a company to collect its credit accounts from its customers. Therefore, a business prefers a shorter average settlement period. The number of days has been same in both the years.
Activity Ratios or Efficiency Ratios are used to measure the effectiveness of a firm's use of resources. Good companies would always put their resources to optimum utilization. Better the activity or efficiency ratio, the better it is for the company and it means the company is utilizing its resources properly and effectively. The ratios that come under this category are: 1. Average Collection Period 2. Degree of Operating Leverage 3. Days Sales Outstanding Ratio 4. Average payment period 5. Asset Turnover Ratio 6. Stock Turnover Ratio 7. Receivables Turnover Ratio
a. Average collection period = Accounts receivable/Average daily credit sales An increase in the average collection period may be the result of a predetermined plan to expand credit terms or the consequence of poor credit administration. b. Ratio of bad debts to credit sales. An increasing ratio may indicate too many weak accounts or an aggressive market expansion policy. c. Aging of accounts receivable. Aging of accounts receivable is one way of finding out if customers are paying their bills within the time prescribed in the credit terms. If there is a buildup in receivables beyond normal credit terms, cash inflows will suffer and more stringent credit terms and collection procedures may have to be implemented.
The days sales in accounts receivable ratio (or the collection period ratio) falls under the category of liquidity ratios. It measures the number of days that net receivables are outstanding, and is calculated by: (365 days × Average Net Receivables) / Net Credit Sales Days Sales in Receivables measures how long it takes for the average debtor to settle his/her account; the smaller the ratio, the faster it takes and the better it is for the company.
ratio of tax collection against the national GDP
Stock holding ratio is the same as inventory turnover ratio. To find this ratio one must find the cost of goods sold to a business and its average inventory over a certain time period.