Creditor, Debtor, Inventor Days and Profit - Paper Example

Published: 2021-08-11 18:53:53
741 words
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University of Richmond
Type of paper: 
Dissertation methodology
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Debtor days are the number of days that elapse before a debtor settles his or her balance that they owe a company. The number of days that the company takes to collect the debt can be many or few depending on how they decide to raise the debt. Debtor days are calculated as follows: Debtor days=trade debtors at the end of the year/ total sales* number of days in the companys financial year

Creditor days refer to the days that a business takes to pay its debts that it owes its goods suppliers. This way firms can analyze its liquidity level. The creditors days is calculated as follows; Creditor days=trade payable/ cost of sales*number of days in a financial year.

Inventor days are the days that a company keeps its purchases before selling them. It is calculated as follows; Average days to sell the purchases= the number of days in a financial year*inventory turnover ratio

Profit is the amount of money or cash that is left for the company after it has taken care of its expenses and the taxes that are levied on it. Profit is calculated as; profit=total revenue - total expenses. Profit has three categories; net, gross and operating profit.

Sample collection and data collection

Sampling is the process in which a selection is made for some individuals in a statistical population to make assumptions for a whole community. The advantages of using sampling to collect data is the low cost involved in sampling and data is obtained in a fast way. Probability and non-probability are the two methods that are used in sampling. Nonprobability is the sampling in whose elements under study dont study a chance of being selected. Techniques that are used in nonprobability sampling include; random quota sampling, purposive random sampling, haphazard, random sampling and volunteer random sampling. In a probability sample, every element under study has a chance that it can be selected and there can be an accurately determined probability. There are four ways in which the probability sampling can be carried out. They include; simple random samplings where all the subsets that are under study in the group are all given a probability that is the same. Systematic sampling which entails arranging the subject under scrutiny in a specific order and then being able to select them using a particular interval throughout the entire number of items. Stratified sampling, here the subjects are grouped into different categories, and then an object is chosen randomly from each class, the categories can be divided by gender or occupation or the size of the company (DANIEL, 2012, P. 66). For my study, I selected a sample on the company size from the FAME database, with bigger companies being preferred as representatives. The period that was used to do sampling was from 2005-2015 with the aim of covering the time before, after and during the double-dip recession. Ten companies were under study

Data collection is the process by which researchers collection information regarding a specific subject in a way that is systematic. Primary data is the data that is collected by researchers themselves by going out to the field to obtain information. They use questionnaires, interviews, and observation as techniques for receiving the data. Secondary data is taken from sources that have been stored. Survey secondary data consist of primary data was collected through the method of questionnaires, then there is documented secondary data and multiple sources secondary data that is a combination of both the documented and survey secondary data (PAWAR, 2004, P. 208).

Ethical issues

When conducting data and doing sampling in a population, researchers need to observe ethics, to ensure the success of their work and respect from other researchers. These ethical issues are as follows: he should be able to protect, give consent, keep confidentiality and practice anonymity of his participants; he should be able to ensure his safety be it physical or psychological, he should avoid copying his own or other researchers work, be respectful and honest. Researchers have a responsibility of carrying out their research in a fair and a manner that is accurate (KIMMEL, 2009, P. 36).


DANIEL, J. (2012). Sampling essentials: practical guidelines for making sampling choices. Los Angeles, Sage Publications.

KIMMEL, A. J. (2009). Ethical Issues in Behavioral Research Basic and Applied Perspectives. New York, NY, John Wiley & Sons.

PAWAR, M. S. (2004). Data collecting methods and experiences: a guide for social researchers. Elgin, IL, New Dawn Press.

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