Measuruing Efficiency Flashcards
1
Q
what are efficiency ratios used for
A
used to help management
determine how key areas of the business are performing, mainly in terms of cash flow and
inventory.
2
Q
what is trade receivable days
A
How long it takes debtors to pay for goods they have purchased on credit.
3
Q
what does trade receivable show
A
very important to know in terms of cash flow as you want to
receive the money owed as quickly as possible. Certainly quicker
than it takes the business to pay its creditors.
the average amount of days it takes for debtors
to pay for a product or service.
4
Q
what are trade payable days
A
how long it takes a business to pay for the goods or services bought on credit.
5
Q
what is inventory turnover
A
average amount of time an item is held by the business
before it is sold.
