The accounts receivable turnover ratio equals
A)profit margin divided by average accounts receivable at the end of the period.
B)gross margin divided by average accounts receivable at the end of the period.
C)sales revenue divided by ending accounts receivable at the end of the period.
D)sales revenue divided by average accounts receivable during the period.
E)gross margin divided by average accounts receivable during the period.

Question

Quizplus · Accepted Answer

The accounts receivable turnover ratio is calculated by dividing the sales revenue by average accounts receivable during the period. This ratio measures how quickly a company collects its outstanding accounts receivable balance. The higher the ratio, the more effectively a company is able to collect its receivables. Option D is the only choice that accurately represents this ratio.

The Accounts Receivable Turnover Ratio Equals