Theoretically, in computing the receivables turnover, the numerator should include

Question

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Receivables turnover ratio measures how quickly a company collects its outstanding receivables. Since the ratio focuses on credit sales, the numerator should only include net credit sales. Net sales may include cash sales, which doesn't affect receivables turnover. Sales is too generic and doesn't distinguish between credit and cash sales. Credit sales, without considering discounts or returns, would overstate the turnover as some of the credit sales may not result in actual receivables. Therefore, the best choice for the numerator in the receivables turnover is net credit sales.

Theoretically, in Computing the Receivables Turnover, the Numerator Should Include