Which of the following statements is true?
A)The receivables turnover ratio indicates the average number of times the company completes the selling and collecting cycle during the year.
B)The days-to-collect measure is 365 divided by the receivables turnover ratio.
C)The receivables turnover ratio and days-to-collect measure move in opposite directions.
D)All of the above.

Question

Quizplus · Accepted Answer

A) The receivables turnover ratio measures how efficiently a company collects its accounts receivables, indicating the number of times in a year that a company collects its average accounts receivable balance. 
B) The days-to-collect measure is calculated by dividing the number of days in a year by the receivables turnover ratio, and it represents the average number of days it takes a company to collect its accounts receivables. 
C) The receivables turnover ratio and days-to-collect measure are directly related, not opposite. An increase in the receivables turnover ratio will result in a decrease in the days-to-collect measure, and vice versa.

Which of the Following Statements Is True