Accounts receivable turnover measures
A) How long it takes to sell inventory on credit
B) How often a company converts its average accounts receivable balance into cash during the period
C) Measures the relationship of cash sales to credit sales
D) How long it takes to sell inventory on credit and how often a company converts its average accounts receivable balance into cash during the period
E) How often a company converts its average accounts receivable balance into cash during the period and measures the relationship of cash sales to credit sales

Question

Quizplus · Accepted Answer

Accounts receivable turnover measures how often a company converts its average accounts receivable balance into cash during the period. Option A refers to inventory turnover, while option C refers to the cash-to-credit sales ratio. Option D and E combine elements of both accounts receivable turnover and inventory turnover or cash-to-credit sales ratio, respectively.

Accounts Receivable Turnover Measures