Efficiency Equations Flashcards by Sierra Productions

Q

Inventory turnover=

How many times inventory is sold and replaced

A

(AverageInventory/ CostofGoodsSold) x 365

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Q

AverageInventory=

A

(OpeningInventory+ClosingInventory) / 2

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Q

Trade receivable days=

How long it takes customers to pay the business

A

(Trade receivables/ credit sales) × 365

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Q

Trade PayablesDays=

How long it takes the business to pay suppliers

A

(Trade payables/ credit purchases) x 365

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