The days' sales uncollected ratio is calculated by
A) Dividing accounts receivable by net sales
B) Dividing accounts receivable by net sales and multiplying the result by 365
C) Dividing net sales by accounts receivable
D) Dividing net sales by accounts receivable and multiplying the result by 365
E) Multiplying net sales by accounts receivable and dividing the result by 365

Question

Quizplus · Accepted Answer

The days' sales uncollected ratio is calculated by taking the accounts receivable and dividing it by the net sales, and then multiplying that by 365 to determine the average number of days it takes to collect payment for a sale. Therefore, option B correctly represents the formula for the days' sales uncollected ratio.

The Days' Sales Uncollected Ratio Is Calculated by