Ratio of receivables to current assets
This query is : Resolved
17 November 2010
SIR
Here is one term along with its definition
Ratio Of Receivables To Current Assets:
Receivables as a percentage of current assets would reveal the size of receivables in current assets and the opportunity cost associated with it, higher the percentage and higher is the cost of carrying the receivables.It is therefore desired that a firm needs to carry the least percentage of receivables as possible without affecting the sales volume
Can you please help me in this with example?? Please
Here is one term along with its definition
Ratio Of Receivables To Current Assets:
Receivables as a percentage of current assets would reveal the size of receivables in current assets and the opportunity cost associated with it, higher the percentage and higher is the cost of carrying the receivables.It is therefore desired that a firm needs to carry the least percentage of receivables as possible without affecting the sales volume
Can you please help me in this with example?? Please
19 November 2010
hi pushkar,
here's ur answer:
Ratio of receivables to current assets =
(Receivables)/(Current Assets)
for example, if the total current assets are 100 and receivables are 20, then the ratio will be 20/100 = 0.2
this means that 20% of the current assets are receivables.
we know that funds that are employed in the business carry an opportunity cost. hence if this ratio is very high, it means that the credit policy of the business may not be sound, too much money is locked up in the receivables. if this money were not locked up in the receivables, it could have have been invested elsewhere to earn a return, or may have been repaid to the financier (in case working capital is borrowed).
here's ur answer:
Ratio of receivables to current assets =
(Receivables)/(Current Assets)
for example, if the total current assets are 100 and receivables are 20, then the ratio will be 20/100 = 0.2
this means that 20% of the current assets are receivables.
we know that funds that are employed in the business carry an opportunity cost. hence if this ratio is very high, it means that the credit policy of the business may not be sound, too much money is locked up in the receivables. if this money were not locked up in the receivables, it could have have been invested elsewhere to earn a return, or may have been repaid to the financier (in case working capital is borrowed).
Message likes :
1 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Difference between Date of Payment and Date of Deduction?
- ITDS U/S.194T of Firm
- Unregistered suppliers utility
- Tax Audit Applicability – Newly Formed Partnership Firm with Profit Below 6%/8%
- Non-Compliance documents have not been submitted by the contractors debited
- EXPORT COMMERCIAL INVOICE HSN CODE
- GST Rate for Catering Services
- FCRA 6 E- Intimation
- NRI starting business in India
- The TDS balance for March 26 shows a mismatch between the books and the portal; what should be done
- Filling ITR - U
- Form 140 tds
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
- CALCULATION OF DEFFERED TAX - OP BL IS DTL & CURRET IT DTA
- LLP audit under companies act
- Experienced CA recommendation from Kolkata for FNO return filing
- Interest Reporting in Form 168
- Sales of goods of amount Rs77 lakhs to a party
- Tax Demand of ₹4,650 for AY 2026-27
- Concept of Vendor and customner reconciliation
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
