Receivable days

• What is receivables days a type of?

  Financial efficiency ratio
• What does receivables days measure?

  Success in collecting payments from debtors
• Who are debtors in the context of receivables days?

  Customers with unpaid sales
• What is the formula for calculating receivables days?

  $\text{Receivables Days} =$$\frac{\text{Receivables}}{\text{Revenue}} \times 365$
• What does the top half of the receivables days formula represent?

  Receivables, also known as debtors
• Where can you find receivables information in financial statements?

  Statement of financial position
• Where is revenue found in financial statements?

  At the top of the income statement
• Why should receivables days be smaller than payables days?

  To receive cash inflows before paying suppliers
• If receivables days are 30 and payables days are 40, what is the gap?

  10 days
• What advantage does having a gap between receivables and payables days provide?

  Ability to accrue interest on cash
• What does a lower receivables days number indicate?

  Better liquidity situation
• How does trade credit affect receivables days?

  It increases the receivables days number
• What does a very high receivables days number suggest?

  Potential cash or liquidity issues
• What might a business need to consider if receivables days are high?

  Using debt factoring