Which financial indicator is calculated as the ratio of annual credit sales to accounts receivable?
A) days of cash
B) average collection period
C) accounts receivable turnover
D) inventory turnover
E) net working capital turnover

Question

Quizplus · Accepted Answer

The financial indicator calculated as the ratio of annual credit sales to accounts receivable is known as accounts receivable turnover. The formula for accounts receivable turnover is (Annual Credit Sales) / (Accounts Receivable). It measures how quickly a company collects its outstanding debts from customers. A higher accounts receivable turnover ratio indicates that a company is collecting its outstanding debts more quickly, while a lower ratio suggests slow payment collection.

Which Financial Indicator Is Calculated as the Ratio of Annual