If a company was interested in calculating how long it takes to receive payment from customers,which of the calculations would they make?
A) Trade receivables/sales revenue x 365
B) Sales revenue/trade receivables x 365
C) Trade payables/cost of sales x 365
D) Cost of sales/trade payables x 365

Question

Quizplus · Accepted Answer

The correct calculation for determining how long it takes for a company to receive payment from its customers is the receivables turnover period, which is calculated as (Trade Receivables / Sales Revenue) x 365. This formula gives the average number of days it takes for the company to collect payments from its customers.

If a Company Was Interested in Calculating How Long It