The days' sales in receivables measures:
A)how many days it takes,on average,to sell the inventory.
B)how many days it takes,on average,to collect receivables.
C)the number of times per year a company sells goods and collects receivables.
D)how well a company can pay its current liabilities with its current assets.

Question

Quizplus · Accepted Answer

The days' sales in receivables is a financial ratio that measures the average number of days it takes a company to collect payment on its credit sales. It is calculated by dividing the accounts receivable by the average daily credit sales. This ratio indicates how efficiently a company is managing its receivables and collecting payments from its customers. A lower number of days indicates that the company is collecting its receivables more quickly, which is a positive sign for its cash flow and liquidity.

The Days' Sales in Receivables Measures