The number of day\u2019s sales in receivables relates the amount of the account receivables to the average daily sales on account. This shows that how firm is efficient in collection of receivables. While looking the ratio the firm shows about 76% increase from 2005 (18.89 day\u2019s) to 2006 (33.29 Day\u2019s) which means the firm is trying to cover its receivables and trying for the recollection of bad debts.
Computation of this ratio provides the liquidity of receivables. This ratio is calculated for internal Analysis. There is a decreasing trend in the calculation from 2005 (17.029) to 2006 (13.89). the firm should maintain a decreasing the bad debt ratio to liquidate
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