Abebe EQA Training document

[1] Average age of material
inventory=material inventory/material
cost*365days
[Should be shorter than 30days]
[2] Average age of under billng=Under
billing/Revnue*365
[Should be the shorter of the better]
[3] Average age of Account
receivable=Account
receivable/Revenue*365
[Should be shorter than 45days]
Activity ratio
[1] Cash conversion period=Average age
of material inventory+Average age of
under billing+Average age of accunt
recievable
[The cash conversion period should be
shorter than 45 days
[2] Average age of account
payable=Accuntpayable/materials+sub
contract*365
[Should be shorter than 45days]
[3] Average age of overbilling =over
billing/Revenue*365
[4] Cash demand period=Cash conversion
period-Average age of Account payable-
Average age of over billing
[The cash demand period should be shorter
than 30days]