Conceptually, what does the days' sales in receivables ratio measure for a ﬁrm?
A) The number of days it takes to generate dollar sales equal to the outstanding accounts receivable balance.
B) The number of days it takes on average for customers to pay their bills.
C) The number of days it takes for a ﬁrm to pay its bills assuming no new payables are created.
D) The number of times during the year a ﬁrm collects and relends its receivables.
E) The number of days it takes before the ﬁrm's working capital becomes negative.

Question

Quizplus · Accepted Answer

The days' sales in receivables ratio measures the number of days it takes, on average, for customers to pay their bills. It indicates how efficiently a firm is managing its accounts receivable and collecting payments from customers.

Conceptually, What Does the Days' Sales in Receivables Ratio Measure