The ratio measures how long on average it takes for debtors to pay. It's expressed as anumber of days.
Eg. If the debtors payment time is 60 days, it means it will take the debtor 60 days to pay for goods. A business with cash flow problems will try to reduce debtors payment periods.
- IF you don't know what percentage of sales were made on credit, it is acceptable to use the sales figure as given in the statement of comprehensive income.
Trade recievable days vary. Businesses to businesses may have longer payment terms. Different options may be given to customers depending on reliability.
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