Debtor days

From Wikipedia, the free encyclopedia

The days debtors ratio measures how quickly cash is being collected from debtors. The longer it takes for a company to collect, the greater the number of days debtors.[1]

\mbox{Debtor days} = \frac {\mbox{Year end trade debtors}} {\mbox{Sales}} \times {\mbox{Number of days in financial year}}

or

\mbox{Debtor days} = \frac {\mbox{Average trade debtors}} {\mbox{Sales}} \times {\mbox{Number of days in financial year}}

when

\mbox{Average trade debtors} = \frac {\mbox{Opening trade debtors} + \mbox{Closing trade debtors}} {\mbox{2}}


[edit] See also

  • Days creditors

[edit] References

  1. ^ (2005) Financial Management: Management Extra. Elsevier, p. 92. ISBN 0750666870.