I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

 

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Don't forget the other side of the coin either. A current ratio and a quick ratio can get bigger than they 

need to be. A company that has large volumes of inventories and receivables might be overinvesting in 

working capital, and so tying up more funds in the business than it needs to. This would suggest poor 

management of receivables (credit) or inventories by the company. 

4.8 Efficiency ratios: control of receivables and inventories 

A rough measure of the average length of time it takes for a company's customers to pay what they owe 

is the accounts receivable collection period.