All of the following are true of the number of days' sales uncollected ratio except:
A) Can be used for comparisons to other companies in the same industry.
B) Is most effective in evaluating the cash sales of a company.
C) Can be used for comparisons between current and prior periods.
D) Reflects the liquidity of receivables.
E) Measures how much time is likely to pass before the current amount of accounts receivable is received in cash.

Question

Quizplus · Accepted Answer

The number of days' sales uncollected ratio is not effective in evaluating cash sales, as it measures how long it will take for the current amount of accounts receivable to be received in cash.

All of the Following Are True of the Number of Days