Days Sales In Receivables Period

Days Sales in Receivables Taking the Receivable Turnover (RT) ratio further, it’s possible to estimate the number of days it takes to recover trade debtors’ accounts. The higher the figure, the less efficient the business is in collecting its client debts. Watch for his over time and look for any deterioration. An overhaul of accounts receivables processes or client communications may be needed. Alternatively, it could reflect the winning of a large account, with a client who perhaps takes longer than average to pay, but who may always do so. If this is possibly the case, assess in conjunction with other measures, such as profitability measures or liquidity measures.

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