Finally, once management has been able to negotiate favorable credit terms with its suppliers and an efficient payment process has been put in place, the amount of time it takes to pay suppliers becomes fairly constant.
The formula for creditor days is as follows:
Here, opening creditors is the count of creditors at the beginning of the year and closing creditors is the count of creditors at the end of the year.
Once we have established our historical growth drivers, we turn to our notes from discussions with management and our own assessments in order to create assumptions of the projected behavior of the selected items and ...
