Two ratios that provide insight on the relationship between credit sales and receivables are:
A)Current ratio and inventory turnover ratio.
B)Accounts receivable turnover and current ratio.
C)Average days to collect receivables and asset turnover.
D)Accounts receivable turnover and average days to collect receivables.

Question

Quizplus · Accepted Answer

The two ratios that provide insight on the relationship between credit sales and receivables are accounts receivable turnover and average days to collect receivables. The accounts receivable turnover ratio indicates how many times a company collects its accounts receivables during a specific period, while the average days to collect receivables measure how long it takes on average for a company to collect its receivables. Together, these ratios give a clear picture of a company's ability to collect its outstanding credit sales.

Two Ratios That Provide Insight on the Relationship Between Credit