If the debtors turnover ratio changes from 45 days to 40 days this indicates that:
A)it is taking longer to collect money from trade debtors.
B)the time taken to collect money from trade debtors is decreasing
C)the time taken to sell inventory is increasing
D)none of the options is correct

Question

Quizplus · Accepted Answer

Debtors turnover ratio is the measure of how quickly a company is collecting money from its customers. A decrease in the number of days indicates that the time taken to collect money from trade debtors is decreasing, which is a positive sign for the company.

If the Debtors Turnover Ratio Changes from 45 Days to 40