Section 3 - 3.6 efficiency ratio analysis Flashcards
1
Q
Credit control
A
Refers to the ability of a business to collect its debts within a suitable timeframe
2
Q
Creditor day ratio
A
Is an efficiency ratio that measures the average number of days it takes for a business to pay its creditors
3
Q
Debtor days ratio
A
Is an efficiency ratio that measures the average number of days it takes for a business to collect money owed from debtors
4
Q
Efficiency ratio’s
A
Show how well affirms resources have been used, such as the amount of time taken by the firm to sell it stock or the average number of days taken to collect money from its debtors
