The receivables turnover ratio is calculated as:

A) net operating revenue divided by average receivables
B) net annual sales divided by average receivables
C) average receivables divided by total assets
D) average receivables divided by net operating revenue

Question

The receivables turnover ratio is calculated as:

A) net operating revenue divided by average receivables
B) net annual sales divided by average receivables
C) average receivables divided by total assets
D) average receivables divided by net operating revenue

Quizplus · Accepted Answer

The receivables turnover ratio examines how quickly the accounts receivable turn over.Hence,the ratio implicitly examines how quickly the accounts are paid.The higher the ratio,the faster the payments and the sooner the firm can utilise the funds.The ratio is computed as: receivables turnover = net annual sales/average receivables.

The Receivables Turnover Ratio Is Calculated As