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Posted by QBConsultant on March 14, 2008, 1:24 pm
Please log in for more thread options > On Mon, 25 Feb 2008 20:11:32 -0800 (PST), omarfdaw...@yahoo.com wrote:
> > Dear Experts,
> > What are the acceptable ratios of the following?
> > 1.Accounts Receivable to Sales
> > 2.Inventoreis to Sales
> > Thanks
>
> 1). Ratios larger than 1.0 indicate that receivables are growing faster
> than sales. It could indicate collection problems.
>
> 2). It could depend on the industry sector, but you don't want to see it
> growing either.
>
> --
> Proofread carefully to see if you any words out.
>
> RocinanteREMOVET...@gmail.com
> 2/26/2008 3:34:21 AM
You should look at the industry averages. For small businesses, you
can get some good info at www.bizstats.com. For large companies try
moneycentral.msn.com. Once you calculate the inventory or accounts
receivable turnover, calculate the day in invty/AR. (365/turnover
ratio). You don't want too many days in AR (<30) and for days in
inventory--it really depends on the type of business, but again fewer
days are better.
Michelle L. Long, CPA, MBA
Author of: Successful QuickBooks Consulting: The Complete Guide to
Starting and Growing a QuickBooks Consulting Business
http://www.SuccessfulQuickBooksConsulting.com
http://www.amazon.com/Successful-QuickBooks-Consulting-Comprehensive-Startin=
g/dp/1434810690
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