Question
What does too low 'Trade Receivables Turnover Ratio' indicate?
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Answer
A too low trade receivables turnover ratio will indicate the liberal and inefficient credit and collection policy of the management. It shows that more money is being locked-up in trade receivables which will result in higher bad-debts, increase in cost of collection and also the loss of interest on the money due from trade receivables.
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Year end
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2nd
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3rd
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4th
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5th
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Nominal value of Debentures to be Redeemed.
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10%
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20%
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[Hint: Reserves and Surplus are already included in Shareholders' Funds.]
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