Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Debtors turnover ratio( or receivables turnover ratio)
Meaning: this ratio establishes a relation ship between net credit sales and averages trade debtors.
Objective: the objective of computing this ratio is to verify the efficiency with which the trade debtors are managed.
Components: There are two components of this ratio which are as under:
Net credit sales
Average trade debtors
Computation: this ratio is computed by dividing the net credit sales by average trade debtors. This ratio is usually expressed as x number of times. In the form of a formula this ratio may be expressed as under:
Net credit sales = gross credit sales -sales returns
Interpretation: it shows the number of times the debtors are turned over during a year. Generally the higher the value of debtors' turnover the more efficient is the management of debtors or more liquid is the debtors. Similarly low debtor's turnover implies inefficient management of debtors/sales and less liquid debtors a very high ratio may imply a firm inability due to lack of resources to sell on credit there by losing sales and profits. There is no rule of thumb which may be used as a norm to interpret the ratio as it may be different form firm to firm depending upon the nature of business. This ratio should be compared with ratio of other firm doing similar business and a trend may also be found to make a better interpretation of the ratio.
Explain the Objectives of management accounting? 1. Planning and policy formulation: the object of management accounting is to supply necessary data to the management for fo
Explain the main purpose of cost centre The main purpose of cost centre is two fields. 1. Recovery of cost: costs are collected, classified into two field in respect of
ADVANTAGES OF "ABC ANALYSIS" The advantages derived from this analysis and its consequent follow up are summarized below: 1) Facilities selective control and thereby save va
School problem is asking to calculate the work in progress inventory for the beginning of a month without providing previous month data.
Explain decision unit - zero base budgeting Decision units: an organization is divided among decision units. The manager of the decision unit justifies the relative budget
Disadvantages of zero base budgeting 1) It is not suitable for all the activities in an organization 2) It has limited application in a profit making organization. In this c
The Baumol Model in 1952 considers cash management complication as same to inventory management problem. For itself the firm attempts to minimize the total cost that is the sum of
Queue discipline 1) It refers to the manner in which customers behave in a queue, and to the order in which they are served up. For illustration; A customer may arrive at a que
EVALUATION OF THE REGRESSION MODEL The regression equation calculated above was based on the assumption that cost varied with the units produced. However, a number of different
Prepare an estimation of working capital needs from the subsequent information of a trading relates with: (a) Projected Annual Sales 1,00,000
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd