The accounts receivable turnover is computed by dividing:
A) total assets by average accounts receivable.
B) net sales by average accounts receivable.
C) net income by average accounts receivable.
D) net purchases by average accounts receivable.

Question

Quizplus · Accepted Answer

The accounts receivable turnover is a ratio that measures how many times a company's accounts receivable are collected during a period. The formula is net sales divided by average accounts receivable. This ratio is useful in determining how efficient a company is at collecting its outstanding debts. Options A, C, and D are not correct because they either use irrelevant figures or do not provide meaningful information about the company's operations.

The Accounts Receivable Turnover Is Computed by Dividing