Debtor’s turnover ratio or accounts receivables turnover ratio shows how many times debtors’ turnover during the year. The higher the debtor’s turnover ratio the better the credit management of the company and Tesco’s debtor turnover ratio for 2005 was 36.93, 2006 was 48.95, 2007 was 44.84, 2008 was 46.70 and for 2009 it is 39.40.
This growing trend over the years except for 2009 shows the credit management of the company is good enough with few bad debts and the situation is under control. This is essential for investors since it shows that the company can manage its credit and avoid bad debts. In 2009, the company has faced certain issues in handling debts due to which it was reduced to 30.40 but with the excellent financial performance in 2009 it can be said that the company will improve the ratio in the coming year with careful strategies as always and this overall growing trend of the company is a major attraction for investors.
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