The financial ratio days' sales in receivables is measured as:
A) Receivables turnover plus 365 days.
B) Accounts receivable times 365 days.
C) Accounts receivable plus sales, divided by 365 days.
D) 365 days divided by receivables turnover.
E) 365 days divided by accounts receivable.

Question

Quizplus · Accepted Answer

Days' sales in receivables is calculated as 365 days divided by the receivables turnover ratio. This measures how many days it takes, on average, for a company to collect its receivables.

The Financial Ratio Days' Sales in Receivables Is Measured As