Measuring Efficiency in Business

What is the formula to calculate trade receivable days?

If a company has trade receivables of £50,000 and credit sales of £200,000, what are the trade receivable days?

• 91.25 days

• 45.63 days

• 60.83 days

• 91.25 days

What does a higher trade receivable days figure indicate?

• Faster collection of debts

• Slower collection of debts

• Higher inventory turnover

• Lower inventory turnover

What is the formula to calculate trade payable days?

If a company has trade payables of £30,000 and credit purchases of £150,000, what are the trade payable days?

• 73 days

• 60 days

• 72.5 days

• 73 days

What does a lower trade payable days figure suggest?

• The company is taking longer to pay its suppliers

• The company is paying its suppliers more quickly

• The company has a higher inventory turnover

• The company has a lower inventory turnover

What is the formula to calculate inventory turnover in days?

If a company has an average inventory of £25,000 and a cost of sales of £100,000, what is the inventory turnover in days?

• 91.25 days

• 60.83 days

• 91.25 days

• 91.25 days

What does a higher inventory turnover in days indicate?

• Faster movement of inventory

• Slower movement of inventory

• Higher trade receivable days

• Lower trade receivable days

Which of the following is NOT a component of the trade receivable days formula?

• Trade receivables

• Credit sales

• Trade payables

• 365 days