Answered step by step
Verified Expert Solution
Question
1 Approved Answer
When calculating days inventory, the average inventory level is compared with the cost of sales. When calculating days debtors, the average accounts receivable balance is
When calculating days inventory, the average inventory level is compared with the cost of sales. When calculating days debtors, the average accounts receivable balance is compared with the sales revenue. Explain why the former ratio uses cost of sales whereas the latter uses sales revenue, and why averages are used instead of year end figures?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started