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Questions and Answers
Receivable turnover ratio measures the number of times receivables are collected during the period
Receivable turnover ratio measures the number of times receivables are collected during the period
True (A)
The numerator of the receivable turnover ratio should be net cash sales
The numerator of the receivable turnover ratio should be net cash sales
False (B)
The average receivables for computing the receivable turnover ratio can be computed using beginning and ending balances of net trade receivables
The average receivables for computing the receivable turnover ratio can be computed using beginning and ending balances of net trade receivables
True (A)
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Study Notes
Receivable Turnover Ratio
- Measures the number of times receivables are collected during a specific period
- Numerator is comprised of net cash sales
- Average receivables for computing the ratio can be calculated using:
- Beginning balance of net trade receivables
- Ending balance of net trade receivables
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