The financial ratio days' sales in receivables is measured as:
A)receivables turnover plus 365 days.
B)accounts receivable times 365 days.
C)365 days divided by the accounts receivable.
D)accounts receivable plus sales, divided by 365 days.
E)365 days divided by the receivables turnover.

Question

Quizplus · Accepted Answer

Days' sales in receivables is the average number of days it takes for a company to collect payment from its customers after a sale is made. This measurement is calculated by dividing the number of days in the year (365) by the receivables turnover ratio. Therefore, the correct choice is E, which is 365 days divided by the receivables turnover.

The Financial Ratio Days' Sales in Receivables Is Measured As