Measuring Business Efficiency with Inventory Turnover and Receivable/Payable Days

The lecture discusses how to measure business efficiency using three key ratios: inventory turnover, receivables days, and payables days. Inventory turnover measures how often a business sells and replaces its inventory. Receivables days indicate the average time customers take to pay, while payables days show how long a business takes to pay its suppliers. Strategies to optimize cash flow include reducing receivables days and extending payables days. The lecture emphasizes the importance of balancing these ratios for healthy cash flow and business efficiency.

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