Practice - Debtors Turnover Ratio Formula
Enroll to start learning
You’ve not yet enrolled in this course. Please enroll for free to listen to audio lessons, classroom podcasts and take practice test.
Practice Questions
Test your understanding with targeted questions
What is the Debtors Turnover Ratio formula?
💡 Hint: Think about what each component measures.
True or False: A lower Debtors Turnover Ratio indicates effective collection practices.
💡 Hint: Consider what a low ratio might signify.
4 more questions available
Interactive Quizzes
Quick quizzes to reinforce your learning
What is the purpose of the Debtors Turnover Ratio?
💡 Hint: It’s linked to credit sales.
True or False: A Debtors Turnover Ratio of 6 implies the company collects its debts six times a year.
💡 Hint: Think about what the numerator and denominator represent.
1 more question available
Challenge Problems
Push your limits with advanced challenges
A tech company reports that it had net credit sales of $2,000,000 but its average accounts receivable is $500,000 over a year. Discuss the implications of this ratio for the company’s liquidity.
💡 Hint: How does this ratio reflect on the company’s cash flow?
A company’s Debtors Turnover Ratio has dropped from 6 to 4 over the previous year. Evaluate the possible reasons for this decline and its potential impact on the company's financial health.
💡 Hint: Consider market conditions and company policies.
Get performance evaluation
Reference links
Supplementary resources to enhance your learning experience.