FIRSTfactor
FINANCE
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Working Capital Specialists

DEBT TURN CALCULATOR

Average period debtors are taking to pay

Most businesses make a large proportion (or even all) of their sales on credit. Debtor days is a measure of the average time payment takes. Increases in debtor days may be a sign that the quality of a company's debtors is decreasing. This could mean a greater risk of defaults (so it does not get paid at all). It could also be an indicator that cash flow is likely to weaken or that more working capital will be required.

Generally lower debtor days numbers are better. Comparisons for the same business over different periods of time are the most often used. Comparison of companies in different sectors are rarely meaningful as the differences are usually largely the result of the nature of different businesses.

 

Total Turnover Outstanding Debtors Average Payment Period