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Sir,
In terms of receiveables and payables days if we don’t have credit purchase or credit sales should we use total revenue and total purchase in denominator?
And sir,
What should be in the denominator of average payables day?
Is it COGS or Purchases?In both cases it depends what information we have available.
For receivables days we should use credit sales but if we don’t know that we use total sales.
For payables days we should use credit purchases, but if we don’t know that we use total purchases (and if we don’t know that we use cost of sales).
I do explain this in my free lectures.
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