PEV Nov 04

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:08AM in AAT student discussion
<BR>Hi,<BR><BR>Can anyone help me with the following please!!<BR>Im not sure if i am just being completely stupid but I can't calculate the following 2 ratios on Task 2.1<BR>Age of creditors in months<BR>Age of debtors in months<BR>I just can't see it!<BR>Argh<BR>Thanks,<BR><BR><BR>sarah

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    PEV Nov 04

    Hi Sarah.<BR><BR>Age of creditors is:<BR><BR>Creditors divided by your Purchases (or Cost of Sales, if you don't have purchases figure - will mention something in other data), times by 12 to convert into months. I've just had a look it says to take the materials figure.<BR><BR>Age of Debtors is:<BR><BR>Debtors divided by Sales (Turnover), and multiplied by 12 to convert into months.<BR><BR>Scott.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    PEV Nov 04

    HI Scott,<BR><BR>Thanks for that - Ive got it now - I missed the use materials bit. Must learn to read the Q!<BR><BR>What a numpty!<BR><BR>Cheers<BR>Sarah
  • System
    System Posts: 100,534 🤖 Admin 🤖
    PEV Nov 04

    Relax, Sarah.<BR><BR>It happens to all of us ;-)<BR><BR>Scott.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    PEV Nov 04

    i understand where the figures come from now e.g for age of creditors = Creditors £60,000/Materials £660,000 = 0.09 x 12 = 1.1 months, but where in the question does it tell you to use materials??????
  • System
    System Posts: 100,534 🤖 Admin 🤖
    PEV Nov 04

    Age of creditors in months/days are usually based on purchases, (materials) as this is what creditors supply and what the company needs to pay back within an agreed credit period<BR>Debtors days/months are based on sales as the debtors buy sales.<BR>hope this helps<BR><BR>Good luck!<BR><BR><BR>

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