The receivables turnover ratio is calculated as:
A)the average number of days from the time a sale is made on account to the time cash is collected.
B)the average number of days from the time a sale is made on account to the time payment is due.
C)how many times a year receivables go uncollected.
D)how many times,on average,the process of selling and collecting is repeated during the period.

Question

Quizplus · Accepted Answer

The receivables turnover ratio measures how many times, on average, the process of selling and collecting is repeated during the period. It is calculated by dividing net credit sales by the average accounts receivable balance during the period. Option A is referring to the average collection period, option B is referring to the credit terms, and option C is incorrect as it is not an accurate representation of the turnover ratio.

The Receivables Turnover Ratio Is Calculated As