Given the following information about a company:
- Receivables turnover = 10 times.
- Payables turnover = 12 times.
- Inventory turnover = 8 times.
What are the average receivables collection period, the average payables payment period, and the average inventory processing period respectively?
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Average Receivables Collection Period |
Average Payables Payment Period |
Average Inventory Processing Period |
Average receivables collection period = (365 / 10) = 36.5 or 37
Average payables payment period = (365 / 12) = 30.4 or 30
Average inventory processing period = (365 / 8) = 45.6 or 46
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