Module 5: Working Capital Management Part 2

Question 1

Accounts Receivable Turnover (ART)?

Answer 1

ART=Credit sales/average accounts receivable

Question 2

Day Sales Outstanding (DSO)?

Answer 2

DSO=(Avg accounts receivable/credit sales) x # of days in the period or 365/ART

Question 3

Collection Day ratio

Answer 3

of days/360 or 365