Accounts receivable turnover is calculated as:
A)total net credit sales divided by average net accounts receivable.
B)average net accounts receivable divided by 365 days.
C)total cost of goods sold divided by 365 days.
D)total net credit sales divided by cost of goods sold.

Question

Quizplus · Accepted Answer

Accounts receivable turnover is calculated by dividing the total net credit sales by the average net accounts receivable. This ratio provides an indication of how quickly a company collects its receivables, and how effective it is at managing its collections. A higher turnover ratio indicates that a company is collecting its receivables more quickly, while a lower ratio suggests that it may have difficulty collecting payments from its customers.

Accounts Receivable Turnover Is Calculated As