Debtors Collection period (Days) Debtor’s collection period measures the average amount of days needed for a company to receive the outstanding sales balance from credit customers. It is better for the companies to keep this ratio as low as possible. Barrett on average took 13 days to receive the outstanding balance from the customers in 2014 while in 2013 debtor’s collection period was 10 days. Therefore the efficiency of Barrett decreased in terms of receiving the outstanding balance from the credit customers. Persimmon average collection period was 9 days in 2014 while in 2013, it was 15 days. It can be seen from the table above that Persimmon efficiency in terms of receiving outstanding balance from the customers increased. Moreover, as compared to Barrett, Persimmon was in a better position and more efficient in 2014. Inventory Turnover (Days) Inventory turnover in days shows the average amount of days it takes a company to sell the inventory from the purchase point. Both Barratt and Persimmon inventory turnover was higher than 365 days in 2013 and 2014 which means that both companies on average took more than a year to sell the inventory. Creditors Payment …show more content…
It is better for the companies to keep this ratio as high as possible. Barratt on average took 154 days to pay the outstanding balance from customers in 2014 while in 2013 creditor payment period was 165 days. Therefore the efficiency of Barratt decreased in terms of paying the outstanding balance to suppliers. Persimmon creditors payment period was 133 days in 2014 while in 2013, it was 141 days. It can be seen from the table above that Persimmon efficiency decreased in terms of paying outstanding balance to suppliers. Moreover, as compared to Persimmon, Barratt is in a better position and more efficient and takes more time to pay the outstanding balance back to its