Question

What is the significance of Debtors Turnover Ratio?

Answer 1

Debtors Turnover Ratio shows how quickly the money is recovered from borrowers. If the borrower’s Turnover Ratio is 6 times, for example, it means that the borrowers are turned into cash 6 times a year. When the debtors’ turnover ratio is high, borrowers pay their bills quickly, and there are fewer chances of bad debts.