Understanding Trade Receivable Days

What does the trade receivable days metric indicate for a business?

• The total sales made by the business in a year.

• The average time customers take to pay their debts to the business.

• The average time it takes for a business to pay its suppliers.

• The average time it takes for a business to deliver goods.

Why is a smaller trade receivable days figure considered better for a business?

• It indicates the business is paying its suppliers faster.

• It shows the business is collecting money from debtors more quickly.

• It suggests the business is reducing its operational costs.

• It means the business is making more sales.

How is the trade receivable days ratio calculated?

• By dividing credit sales by trade receivables and multiplying by 365.

• By multiplying trade receivables by credit sales and dividing by 365.

• By adding trade receivables to credit sales and multiplying by 365.

• By dividing trade receivables by credit sales and multiplying by 365.

In the example of Tom's Tops, what were the trade receivables and credit sales figures used?

• £8,000 and £90,000

• £80,000 and £9,000

• £8,000 and £9,000

• £80,000 and £90,000

What was the calculated trade receivable days for Tom's Tops?

• 50 days

• 32.44 days

• 45 days

• 60 days