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Asked by Nandini Last Modified
Answer 
Bipin Kumar Thakur
Crash Course Expert with 15 years of teaching experience in commerce
There will be no change in the Debtor turnover ratio due to Increse or decrease in the valur of closing stock. Because it doesn't effect to the Debtor turnover ratio. The formula is:
Debtor Turnuover Ratio = Total Credit Sales.
Average Debtors
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The purpose of this ratio is to mesaure the liqudity of the receivables
The ratio explians the relationship of the net credit sales of the firm.The rate at cash generated by turn over of debtors
Debtors turn over ratio=Net credit sales /Avg. debtors
Where as Avg debtors =
Opening balnce +closing balnce /2
Debtors turnover can not difffer by incrementbif closing stock .
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