Accounts Receivable Turnover Ratio

Question 1

_________ Is an efficiency or activity ratio that measures how many times a business can turn its accounts receivable into cash during a period

Answer 1

ACCOUNTS RECEIVABLE TURNOVER

Question 2

TRUE OR FALSE.
The Accounts Receivable Turnover Ratio shows how efficient a company is at collecting its (net sales ) from customers

Answer 2

FALSE. (CREDIT SALES)

Question 3

TRUE OR FALSE.
The Receivable turnover ratio can be viewed as a (liquidity ratio)

Answer 3

TRUE ;P

Question 4

What is the formula for Accounts Receivable Turnover ratio

Answer 4

ACCOUNTS RECEIVABLE TURNOVER RATIO =

NET CREDIT SALES/ AVERAGE ACCOUNTS RECEIVABLE

Question 5

What is the reason why NET CREDIT SALES are used instead of NET SALES.

Answer 5

Its because Net sales don’t create receivables

Question 6

TRUE OR FALSE.
Since the receivables turnover ratio measures a business’ ability to efficiently collect its receivables, it only makes sense that a (higher) ratio would be more favorable

Answer 6

TRUE ;P

Question 7

TRUE OR FLASE
The (Net income sales) is an indication of the quality of credit sales and receivables

Answer 7

FALSE . WOMPWOMP
(ACCOUNTS RECEIVABLE TURNOVER)