Which of the following items is a measure of a company's ability to collect receivables?
A) inventory turnover ratio
B) current ratio
C) days' sales in receivables
D) account receivable balance

Question

Quizplus · Accepted Answer

Days' sales in receivables is a measure of the average number of days it takes a company to collect its accounts receivable. This ratio measures the effectiveness of a company's credit and collection policies in collecting its outstanding receivables. A higher figure indicates that it takes longer for the company to collect its receivables, which may indicate poor credit and collection policies.

Which of the Following Items Is a Measure of a Company's