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Questions and Answers
Receivable turnover ratio measures the number of times receivables are collected during the period
True
The numerator of the receivable turnover ratio should be net cash sales
False
The average receivables for computing the receivable turnover ratio can be computed using beginning and ending balances of net trade receivables
True
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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Description
Test your knowledge about the receivable turnover ratio and its significance in assessing the liquidity of receivables. Understand how to calculate this ratio and its implications for business operations.
