The number of days' sales uncollected:
A) Measures how much time is likely to pass before the current amount of accounts receivable is received in cash.
B) Can be used for comparisons to other companies in the same industry.
C) Can be used for comparisons between current and prior periods.
D) Reflects the liquidity of receivables.
E) All of these.

Question

Quizplus · Accepted Answer

All of these options are correct. The number of days' sales uncollected measures the amount of time it takes for accounts receivable to be collected, making it a measure of liquidity. It can be compared to industry averages or prior periods to gauge performance, and it provides insight into when cash can be expected to be received.

The Number of Days' Sales Uncollected