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What is the debtor days calculation?

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Question ajoutée par Shameer Nazir Madari , Assistant Finance Manager , METAL AND RECYCLING COMPANY K.S.C. (PUBLIC)
Date de publication: 2016/04/28
Masood Hasnain
par Masood Hasnain , Senior Accountant , Eijarat Rental Solution Co

Debtor days is the average number of days required for a company to receive payment from its customers for invoices issued to them.  A larger number of debtor days means that a business must invest more cash in its unpaid accounts receivable asset, while a smaller number implies that there is a smaller investment in accounts receivable, and that therefore more cash is being made available for other uses.

The calculation of debtor days is:

(Trade receivables / Annual credit sales) x 365 days

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