Trade Receivable Vs Trade Payable — Microsoft Excel
In this article, we will walk you through the fantastic journey of learning trade receivable in accounting and finance using excel. As we understand the term trade receivable in the sense of business, than it defines our services or it also tells us how many products we sold on the credit basis and how well we run our business and is it worthy for us, it all comes under this term.
Trade Receivable
Trade receivable is a type of current assets and is defined as the worth of the goods or services sold by the company on credit basis on the basis of invoices issued.
We calculate the debtor’s collection period on the basis of trade receivable. Trade receivable is also known as accounts receivable.
Debtors Collection Period
Debtors Collection Period indicates the average time taken to collect trade debts. It is also known as Days Sales Outstanding.
Some analysts or professionals take 360 days instead of 365 days.
We have already discussed debtors turnover ratio in section C in Financial Ratios.
Trade Payable
Trade payable is a type of current liabilities and is defined as the worth of the goods or services bought by the company on credit basis on the basis of invoice received. We calculate the creditors collection period on the basis of trade payable. Trade
payable is also known as accounts payable.
Creditors Payment Period
Creditors payment period indicates the average time taken to settle its debts with the suppliers. It is also known as Days Payable Outstanding.
Some analysts or professionals take 360 days instead of 365 days.
We have already discussed creditors turnover ratio in section C in Financial Ratios.
Conclusion
Finally, we will understanding the concepts of trade receivable and trade payable in finance and along with that we also covering the difference of these two terms in business and we also discussing how it impact in our business progress and worthiness.
