acceptable ratios

Dear Experts, What are the acceptable ratios of the following? 1.Accounts Receivable to Sales 2.Inventoreis to Sales Thanks

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On Mon, 25 Feb 2008 20:11:32 -0800 (PST), snipped-for-privacy@yahoo.com wrote:

1). Ratios larger than 1.0 indicate that receivables are growing faster than sales. It could indicate collection problems.
2). It could depend on the industry sector, but you don't want to see it growing either.
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You should look at the industry averages. For small businesses, you can get some good info at www.bizstats.com. For large companies try moneycentral.msn.com. Once you calculate the inventory or accounts receivable turnover, calculate the day in invty/AR. (365/turnover ratio). You don't want too many days in AR (<30) and for days in inventory--it really depends on the type of business, but again fewer days are better.
Michelle L. Long, CPA, MBA Author of: Successful QuickBooks Consulting: The Complete Guide to Starting and Growing a QuickBooks Consulting Business http://www.SuccessfulQuickBooksConsulting.com (Amazon.com product link shortened)
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