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Key ratios -working capital management

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Faster production, fewer product lines, just in time ordering will reduce average days. Receivables Ratio (in days) Debtors * 365/Sales = x days It take you on average x days to collect monies due to you. If your official credit terms are 45 day and it takes you 65 days... why ? One or more large or slow debts can drag out the average days...
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If your official credit terms are 45 day and it takes you 65 days... why ? One or more large or slow debts can drag out the average days. Effective debtor management will minimize the days. Payables Ratio (in days) Creditors * 365/Cost of Sales (or Purchases) = x days On average, you pay your suppliers every x days...
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