0
Receivables collection period refers to the number it takes debtors to pay which is about the last part of the operating cycle where the company will generate the required cash to start another cycle. the longer it takes the debtors to pay, the longer the operating cycle becomes however short are the other elements such as raw material conversion cycle, work in progress conversion cycle, marketing and distribution cycle for finished goods. since most companies run their account on accrual basis such that it gives rise to selling goods and services on credit, there will be need to have a good collection policy in place so as to avoid tying down capital in the hands of customers and most importantly to shorten the average collection period to have a shorter operating cycle. the shorter the operating cycle, most especially for merchandising, the better the company's efficiency.
Lateef Ismail Adebayo
Credit and Marketing
Union Bank of Nigeria Plc.
+2348035571160.
What else can I help you with?
What is accelerating collection of receivable?
One way of reducing operating cash requirements is by speeding up accelerating collection of receivables . This may be effected byshortening credit terms and offering special discount to customer who settle their accounts within a specified period.
What is Accounts receivable collection period ratio formula?
Average Colection period: Accounts Receivables divided by Average daily credit sales
What does a high average collection period indicate?
A high average collection period indicates that a firm is having trouble collecting its outstanding credit, thereby transferring it to their accounts receivables. It could be because of policy - maybe no fees, or the management in charge of collection is not doing their job.
What is Debtors collection period?
The average amount of days after making a sale before receiving cash. DCP = Receivables/Average sales per day or DCR = (average debtors/turnover)*365
Are sales assets or liabilities?
Sales are neither assets nor liabilities. Sales is the operating revenue recognized for a company over a period of time. However, the resulting cash and receivables from Sales are assets.
What is accelerating collection of receivable?
One way of reducing operating cash requirements is by speeding up accelerating collection of receivables . This may be effected byshortening credit terms and offering special discount to customer who settle their accounts within a specified period.
What is Accounts receivable collection period ratio formula?
Average Colection period: Accounts Receivables divided by Average daily credit sales
What does a high average collection period indicate?
A high average collection period indicates that a firm is having trouble collecting its outstanding credit, thereby transferring it to their accounts receivables. It could be because of policy - maybe no fees, or the management in charge of collection is not doing their job.
What is Debtors collection period?
The average amount of days after making a sale before receiving cash. DCP = Receivables/Average sales per day or DCR = (average debtors/turnover)*365
Are sales assets or liabilities?
Sales are neither assets nor liabilities. Sales is the operating revenue recognized for a company over a period of time. However, the resulting cash and receivables from Sales are assets.
What is the definition of 'trade receivables'?
Trade receivables is what a business is due after delivering goods or services. This is typically for a short time period and would be considered an asset for the business.
asset efficiency analysis?
these ratios calculate the amount of revenue contributed by assets of a company. higher ratios imply higher revenue contributed and higher efficiency. some of the ratios calculated here are:a) Inventory turnoverInventory turnover = Cost of goods sold / Average inventoryAverage inventory = (Opening inventory + Closing inventory) / 2b) Receivables turnoverReceivables turnover = Revenue / Average receivablesAverage receivables = (Opening receivables + Closing receivables) / 2
Which category is days sales in receivable?
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.
What is the average collection period?
The average collection period is the amount of time that is taken to recover money. Often the average collection period applies to business and sale-related circumstances.
What is Average settlement period for trade receivable?
Average settlement period for trade receivables = Average inventory held divided by cost of sales (times 365).
If the accounts receivable turnover ratio is decreasing what will happen to the average collection period?
Avg Collection Period increases.
Difference between operating lease and finance leasing?
An operating lease does not transfer the risks and rewards to you (lessee) at the end of the lease period where a finance lease does. So in affect the operating lease can be thought of as renting the asset while a finance lease can be seen as a finance option to own the asset.
