Debtors & Creditors Days

[Ameet Kumar Notani]

I've following Qs/confusion on following three heads; for which it is requested to clarify please.

1- Debtors Days
* Difference between Receivables & Trade Debtors appearing seperately in any business's asset side.
* Are receivables to be accounted in addition to Trade Debtors while calculating Debtors Days/Ratio.

2- Creditors Days
* Whether bank's borrowing are to be accounted in addition to Trade Creditors while calculating Creditors days/ratio.

3- Cash Flow Statement
* Whether changes in bank's borrowing are be accounted under operating activities [Under current liability] or under Investing activities [Under Increase/Decrease in bank's borrowing]
* Treatment of personal drawing amount either under operating or investing cash flows.
* Treatment of Trade creditors amount either under operating [Under current liability]or investing cash flows.

 

[ahmad_126]

1- Debtors Days
Receivables and Trade Debtors are the same thing if those are related to sales or revenue of the company if so, both should be added while calculating Debtors Ratio

2- Creditors Days
Bank borrowing should not be included while calculating Creditors Ratio. Creditors ratio only includes pending payments related to purchase of the company.

3- Cash Flow Statement
Changes in bank's borrowing are to be accounted under financing activities.
Personal Drawings should also be treated as Financing Activities.
Treatment of Trade creditors amount will be under operating activities(Current liabilities)

for any other information feel free to contact
Email: (e-mail address removed)
Web: www.mcbsols.com

 

[Ameet Kumar Notani]

Thank You very much Ahmed sb for guidance & clarification.

 

[Ameet Kumar Notani]

For Creditors days clarification, if we as a lender bank also take into account bank's borrowing while calculating Creditors days in order arrive at exact cash/asset conversion cycle of business; can we do this or it would be against GAAP.