Which financial ratio measures how many times net credit sales are collected in accounts receivable during a period?
APayables Turnover Ratio
BReceivables Turnover Ratio
CAsset Turnover Ratio
DWorking Capital Ratio
Explanation
Core Concept: Accounts Receivable Turnover Ratio = Net Credit Sales / Average Accounts Receivable. It measures credit collection efficiency. Context/Distractors: Days Sales Outstanding (DSO) = 365 / Receivables Turnover. Exam Tip/Key Fact: A higher receivables turnover ratio indicates effective collection policies and quality credit customers.
Exam Relevance
- Topic: Financial Statement Analysis
- Subtopic: Receivables Management
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