What is Debtor Days?
Debtor days provide insight into a company's efficiency in managing its accounts receivable and its ability to collect cash from customers in a timely manner. A lower number of debtor days indicates that a company is collecting payments more quickly, which can improve cash flow and liquidity. Conversely, a higher number of debtor days may indicate potential issues with customer creditworthiness, collection processes, or sales terms.
Comparing debtor days to industry benchmarks or historical data can help assess a company's performance relative to its peers and track improvements or deterioration in accounts receivable management over time. Additionally, analyzing debtor days alongside other liquidity and working capital metrics can provide a comprehensive understanding of a company's financial health and operational efficiency.
How to Calculate Debtor Days?
Debtor Days calculator uses Debtor Days = (Accounts Receivable/Credit Sales)*365 to calculate the Debtor Days, The Debtor Days is a financial metric that measures the average number of days it takes for a company to collect payment from its customers for credit sales. Debtor Days is denoted by DD symbol.
How to calculate Debtor Days using this online calculator? To use this online calculator for Debtor Days, enter Accounts Receivable (AR) & Credit Sales (CS) and hit the calculate button. Here is how the Debtor Days calculation can be explained with given input values -> 677.8571 = (65000/35000)*365.