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These ratios calculated with the help of items of both Profit and Loss and Balance Sheet.
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Example
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Debtor Turnover Ratio=
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Net Sales/Debtors
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Example 1
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Suppose Company has a Sales of 140 lacs
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Sales Return=20 lacs
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It has debtors of 30 lacs
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What is Debtor Turnover Ratio?
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Net Sales=140-20 =120lacs

Debtors=30 lacs

Debtor Turnover Ratio=

Net Sales/Debtors

=120/30

=4

-ea-

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Example 1 Continued
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What is Debtor Collection Period in this Case
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Debtor Collection Period=

360/ Debtor Turnover Ratio =360/4=90

Debtor Collection Period (in months)=

12/ Debtor Turnover Ratio =12/4=3 month

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