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Debtor Ageing Ratio

The debtor ageing ratio indicates the average time it takes your business to collect its debts. It's worth looking at this ratio over a number of financial years to monitor performance trends.

Use information from your annual profit and loss statement along with the trade debtors figure from your balance sheet for that financial year to calculate this ratio.

For information on using this calculator see below.


Debtor Ageing Ratio (in days)

Input trade debtors amount $ Field required
Input sales amount $ Field required

A red star Field required indicates a mandatory field.
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A ratio that is lengthening can be the result of some debtors slowing down in their payments. Economic factors, such as a recession, can also influence the ratio. Tightening your business' credit control procedures may be required in these circumstances.

The debtor ageing ratio has a strong impact on business operations particularly working capital. Maintaining a running total of your debtors by ageing (eg. current, 30 days, 60 days, 90 days) is a good idea, not just in terms of making sure you are getting paid for the work or goods you are supplying but also in managing your working capital.

The calculation used to obtain the ratio is:

  Debtor Ageing Ratio (in days) =   (Trade debtors / Sales) * 365

 

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NOTE: The calculator is provided for illustrative purposes only and the calculations are based on the accuracy of the information provided by you. The information about the calculators and the results of the calculations are necessarily general and are only intended as a guide. When deciding on what your business will do, many factors need to be considered, including your business' situation and financial position.

ANZ will not store the information provided in this calculator.