Asked by Sarah Pullium on Apr 29, 2024
Verified
Current A/R Balance ÷ Average Monthly Gross Production
A) accounting formula
B) accounts receivable ratio formula
C) gross collection ratio formula
D) net collection ratio formula
E) cost ratio formula
F) assets
G) write-offs
H) liabilities
I) accounts receivable
J) income statement
Accounts Receivable Ratio Formula
A financial metric used to evaluate how efficiently a company is managing its receivables and how quickly it turns them into cash.
Average Monthly Gross Production
The total production or output of a company or industry, averaged over a month, before deductions for costs or expenses.
- Recognize the formulas used for calculating financial ratios and their applications.
Verified Answer
ZK
Zybrea KnightMay 03, 2024
Final Answer :
B
Explanation :
The term "Current A/R Balance ÷ Average Monthly Gross Production" is used to calculate the accounts receivable ratio, which measures the average amount of time it takes for a business to collect payments owed.
Learning Objectives
- Recognize the formulas used for calculating financial ratios and their applications.
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