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

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

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

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

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

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