The accounts receivable turnover
A) Is computed by dividing net credit sales for the accounting period by the cash realizable value of accounts receivable on the last day of the accounting period.
B) Can be used to compute the average collection period.
C) Is a method of evaluating the solvency of net accounts receivable.
D) Is only important to internal users of accounting information.

Question

Quizplus · Accepted Answer

The accounts receivable turnover ratio measures how efficiently a company collects its receivables. It can be used to compute the average collection period by dividing the number of days in the period by the turnover ratio.

The Accounts Receivable Turnover