The resources of the business are used to generate sales and profits

The resources of the business are used to generate sales and profits. The more efficiently these resources can be used the more profit can be made. Looking at inventories day in 2015 was 147.3 which is a good one, but it increases in 2016 to 173.8 and furthermore to 183.8 in 2017. This is worrisome because of the increasing trend. Meanwhile, if current liabilities need to be paid with sale of inventories, inventory days cannot be enough to achieve this, because its high than debtor days.
Trade receivables collection debtor days give the number of days for a debtor to pay back the company. While Trade payable Creditor days gives the same details for creditors. The less days, the better because the money is not earning profit. Looking at the debtor days in 2015 is 123.69, which increased to 142.07 in 2016 and then decrease to 133.29 in 2017. Looking at the creditor days in 2015 is 162, which decreased to 129.9 in 2016 and then increases to 137.5 in 2017. If the days are high, it shows the company can’t pay back in time, which would spoil its reputation on creditors.

x

Hi!
I'm Dora

Would you like to get a custom essay? How about receiving a customized one?

Check it out
x

Hi!
I'm Barry!

Would you like to get a custom essay? How about receiving a customized one?

Check it out