Home Restaurant Free Restaurant Business Plan 8.6 Average Collection Period Ratio Analysis
8.6 Average Collection Period Ratio Analysis
The Average Collection Period Ratio is also known as the Days Receivable ratio. This is a key liquidity ratio for a small business like A Touch of Tuscany. The average collection period ratio calculates the amount of days worth of receivables are outstanding by dividing the Daily sales by the total accounts receivables for a small business like A Touch of Tuscany The daily sales are of course the annual sales divided by 365.
As we can see from our analysis, the average collection period ratio for A Taste of Tuscany is projected to be 0.91 days for each of the three years of 2009,2010 and 2011 in our plan. This means that it will take less than one day for us on average to collect the accounts recievable - this is of course no surprisesince the full restaurant business requires payment upon delivery of goods and service with a few exceptions like a large catering order where the restaurantmay have to only get a deposit upfront.
Again, while this ratio may not be very important in the full service restaurant business in absolute terms, a major change in this ratio may imply that there is something changing like sales going down or recievables going up, that will warrant a closer look by management.
Quick Links:
- Go to the Corresponding Template section for this industry.
- Go to the Corresponding Questionnaire section for this industry.
Small Business Owner Resource Center
Articles on the Small Business Financing Sources, the Small Business Loan Basics, small business loans Checklist and SBA Loans are incredible sources of knowledge for the small business owner.
Credit Report and Credit Score Analysis, how to Read a Personal Credit Report and all about Business Credit cover the intricacies of credit and are required reading for everybody.
The Foundation Grant Directory is a free listing of sources for grants by state. Why not look if there is some free money out there for your business. Hey - you never know!
The Business Loan Application covers every item you will need in your loan package and tells you how to get approved for business loans.
Fire your loan broker and use our Free Business Loans Bank / Lender Directory to find every bank in the country lending to small businesses.
If you are looking to start a business - look no further. Check out the Free Incorporation Guide discussion and the State Incorporation Resource Directory.
