What is a goal for businesses regarding Debtor Turnover?

Aiming for a high debtor turnover is crucial for businesses as it significantly enhances cash flow and liquidity. Debtor turnover reflects how efficiently a company collects cash from its customers after credit sales. A higher turnover rate indicates that the business can quickly convert its credit sales into cash, which is essential for meeting operational expenses, investing in growth opportunities, and maintaining financial health.

Improving cash flow allows a business to cover its immediate liabilities, reinvest in its operations, and provide stability in times of economic fluctuation. Therefore, striving for a high debtor turnover not only enhances liquidity but also supports overall business sustainability and success.