12 October 2011
Debtors turnover ratio = sales / average debtors.
Hence for a good position, a high debtors turnover ratio is ideal. High debtors turnover ratio means the sales is more as compared to amount blocked in debtors.
If the turnover ratio increases, it may indiacte the following :- 1) Increase in sales 2) Improvement in collection and collection period, etc
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