Question

To determine accounts receivable turnover, net sales is divided by

A) beginning net accounts receivable.
B) average gross receivables.
C) cost of goods sold.
D) 365 days.

Answer 1

To determine accounts receivable turnover, net sales is divided by average gross receivables.

Step-by-step explanation:

To determine accounts receivable turnover, net sales is divided by average gross receivables. This ratio helps measure how efficiently a company collects payments from its customers. It indicates the number of times a company can collect its average gross receivables in a given period. The formula is calculated as:

Accounts Receivable Turnover = Net Sales / Average Gross Receivables