Can someone explain: No. days in receivables = (365/receivables turnover) = average receivables/average day’s credit sales) Not clear on the last part…
More used formula for No. days in Receivables = 365 * (Avg Receivables / Credit Sales) If you divide Credit Sales for the year by 365, you get Avg Daily Credit Sales. Hence, No of days in Receivables = Avg Receivables / Avg DAILY Credit Sales.