A measure of a company's ability to collect cash from credit customers is the:
A)accounts receivable turnover.
B)days' payable outstanding.
C)inventory turnover.
D)cash conversion cycle.

Question

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The accounts receivable turnover ratio measures how efficiently a company is collecting cash from credit customers. It is calculated by dividing total sales by average accounts receivable over a period of time. A high accounts receivable turnover indicates that a company is collecting cash quickly from customers, while a low accounts receivable turnover indicates that a company is having trouble collecting cash and may have a problem with bad debt. B, C, and D are measures related to a company's payables, inventory, and cash management, respectively.

A Measure of a Company's Ability to Collect Cash from Credit