Podcast
Questions and Answers
What does an increase in the accounts receivable turnover ratio indicate?
What does an increase in the accounts receivable turnover ratio indicate?
- Higher gross credit sales
- Slower collection of receivables
- Lower average accounts receivable
- Faster collection of receivables (correct)
Which component is NOT included in the accounts receivable turnover ratio calculation?
Which component is NOT included in the accounts receivable turnover ratio calculation?
- Investment receivables (correct)
- Net annual credit sales
- Average gross accounts receivable
- Allowances for returns and allowances
How should net annual credit sales be adjusted for a quarterly period?
How should net annual credit sales be adjusted for a quarterly period?
- Add 4%
- Leave as is
- Multiply by 4 (correct)
- Divide by 4
What analysis is crucial for understanding a company's accounts receivable turnover efficiency?
What analysis is crucial for understanding a company's accounts receivable turnover efficiency?
What effect does a decrease in the accounts receivable turnover ratio typically indicate?
What effect does a decrease in the accounts receivable turnover ratio typically indicate?
The formula for accounts receivable turnover ratio consists of which two main components?
The formula for accounts receivable turnover ratio consists of which two main components?
Which statement correctly describes the average gross accounts receivable in the turnover ratio calculation?
Which statement correctly describes the average gross accounts receivable in the turnover ratio calculation?
What is meant by 'net annual credit sales' in the formula for the turnover ratio?
What is meant by 'net annual credit sales' in the formula for the turnover ratio?
Flashcards
Accounts Receivable Turnover Ratio
Accounts Receivable Turnover Ratio
Measures how often a company collects its receivables in a year.
Net Annual Credit Sales
Net Annual Credit Sales
Gross credit sales minus allowances for returns and allowances.
Formula for Turnover Ratio
Formula for Turnover Ratio
Accounts Receivable Turnover Ratio = Net Annual Credit Sales / Average Gross Accounts Receivable
Average Gross Accounts Receivable
Average Gross Accounts Receivable
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Interpretation of Increase
Interpretation of Increase
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Interpretation of Decrease
Interpretation of Decrease
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Industry Comparison
Industry Comparison
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Allowance for Credit Losses
Allowance for Credit Losses
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