The number of days' sales uncollected:
A) Is used to evaluate the liquidity of receivables.
B) Is calculated by dividing accounts receivable by sales.
C) Measures a company's ability to pay its bills on time.
D) Measures a company's debt to income.
E) Is calculated by dividing sales by accounts receivable.

Question

Quizplus · Accepted Answer

The number of days' sales uncollected is a measure of how long it takes for a company to collect its accounts receivable. It is used to evaluate the liquidity of receivables, as it shows how quickly a company can turn its receivables into cash. It is calculated by dividing accounts receivable by average daily sales.

The Number of Days' Sales Uncollected