Sir, as recievable days formula is average debtors/credit sales x 365 days. Sir here, in avg debtors we take closing balance of debtor or do we take average of opening and closing balance?
Is inventory turnover, inventory turnover period and inventory days the same thing?
If working capital is given in NPV questions then will it always be at time 0?
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working capital and inventory
7y ago#1It depends on the information given in the question. Best normally would be to take the average receivables and average inventory. However, if comparing two years, we can only take the average is we know both the opening and closing figures for both of the year. Usually we do not know both, which is why most often we use just the closing receivables and inventory.
With regard to working capital, then although it is almost always required at time 0, usually more is required in later years as well - I work through an example of this in my free lectures on investment appraisal with working capital.
With regard to working capital, then although it is almost always required at time 0, usually more is required in later years as well. By more you mean to say incremental working capital. Correct?
And is inventory turnover, inventory turnover period and inventory days the same thing?
7y ago#3Correct.
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