Practice Debtors Turnover Ratio Formula - 19.2.4.b | 19. Financial Statement Analysis – Ratio Analysis | Management 1 (Organizational Behaviour/Finance & Accounting)
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19.2.4.b - Debtors Turnover Ratio Formula

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is the Debtors Turnover Ratio formula?

💡 Hint: Think about what each component measures.

Question 2

Easy

True or False: A lower Debtors Turnover Ratio indicates effective collection practices.

💡 Hint: Consider what a low ratio might signify.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What is the purpose of the Debtors Turnover Ratio?

  • To measure inventory efficiency
  • To assess collection efficiency
  • To calculate total revenue

💡 Hint: It’s linked to credit sales.

Question 2

True or False: A Debtors Turnover Ratio of 6 implies the company collects its debts six times a year.

  • True
  • False

💡 Hint: Think about what the numerator and denominator represent.

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Challenge Problems

Push your limits with challenges.

Question 1

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?

Question 2

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.

Challenge and get performance evaluation