The number of days' sales uncollected
A)Measures how much time is likely to pass before a company receives cash receipts from credit sales equal to the current amount of accounts receivable
B)Is used to compare a company to other companies in the same industry
C)Is used to compare between current and prior periods
D)Is used to compare a company to other companies in the same industry and is used to compare between current and prior periods
E)All of these

Question

Quizplus · Accepted Answer

The number of days' sales uncollected is a financial metric that measures the average time it takes for a company to collect cash from its credit sales, making it useful for assessing the efficiency of a company's credit and collection policies. It is indeed used for internal comparison over different periods to track improvements or declines in collection efficiency (C), and for external comparison with other companies in the same industry to gauge competitive standing and industry standards (B, D). Therefore, all the provided options (A, B, C, D) are correct applications or interpretations of the number of days' sales uncollected, making E the correct choice.

The Number of Days' Sales Uncollected