A company with an Accounts Receivable turnover of four means that the company collects its receivables approximately every ________ days.
A) 30
B) 60
C) 90
D)120

Question

Quizplus · Accepted Answer

Accounts receivable turnover is calculated as net credit sales divided by average accounts receivable. A turnover ratio of 4 indicates that the company collects its receivables every 90 days on average. This can be calculated by dividing 365 days by the turnover ratio (365/4 = 90.625). Therefore, the best choice is C) 90.

A Company with an Accounts Receivable Turnover of Four Means