Ratio analysis 2: liquidity, working capital, and long-term financial stability
1. Receivables days enable businesses to determine the speed with which credit sales are turned into cash.

2. Payables days measure average stockholding periods and determine how quickly a business sells inventories.

3. Receivables days measure the speed at which liabilities are paid off.

4. Inventory days indicate the speed at which goods in stock are being sold.

5. Payables days help entities evaluate the efficiency of the credit control system.

6. Inventory days measure the speed with which cash is collected from credit sales by a business.