The number of days' sales in receivables
A) is an estimate of the length of time the receivables have been outstanding
B) measures the number of times the receivables turn over each year
C) is Net Credit Sales divided by Average Receivables
D) is not meaningful and therefore is not used

Question

Quizplus · Accepted Answer

The number of days' sales in receivables gives an estimate of the length of time that the receivables have been outstanding. It is calculated by dividing the ending balance of accounts receivable by the average daily credit sales. This ratio helps a company determine how efficiently it is collecting its accounts receivable.

The Number of Days' Sales in Receivables