Accounts Receivable Turnover Ratio Quiz

<p>Comparison with industry averages (C)</p> Signup and view all the answers

<p>Slower collection of receivables (C)</p> Signup and view all the answers

<p>Net annual credit sales and average gross accounts receivable (A)</p> Signup and view all the answers

<p>It should match the period used for net annual credit sales. (C)</p> Signup and view all the answers

<p>Gross credit sales minus returns and allowances (C)</p> Signup and view all the answers

Measures how often a company collects its receivables in a year.

Gross credit sales minus allowances for returns and allowances.

Accounts Receivable Turnover Ratio = Net Annual Credit Sales / Average Gross Accounts Receivable

Average amount of trade receivables during a period.

Indicates faster collection of receivables, desirable for a company.

Indicates slower collection of receivables, generally undesirable.

Assessing a company's ratio against industry averages for credit management efficiency.

The difference between gross and net receivables, accounting for potential bad debts.