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Working capital management
Trade receivables days
This is the length of time credit is extended to customers.
Trade receivables
= ––––––––––––––– × 365
Credit sales
Trade payables days
This is the average period of credit extended by suppliers.
Trade payables
= –––––––––––––– × 365
Credit purchases
Working capital turnover
Sales revenue
= –––––––––––––––
Net working capital
Be flexible – the exact figure you need may not be given – use the closest
approximation.
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