Asked by virendra kumar on Jun 21, 2024

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A Company had net sales of $23,000,and its average account receivables were $5,700.Its accounts receivable turnover is 0.24.

Net Sales

The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods, and discounts.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects its receivables or the speed of debt collection from customers.

Average Account Receivables

The average amount of money owed to a company by its customers for goods or services delivered on credit.

  • Understand the computation and importance of the accounts receivable turnover ratio.
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AM
Akash MinochaJun 26, 2024
Final Answer :
False
Explanation :
The accounts receivable turnover is calculated by dividing net sales by average accounts receivable, which in this case is $23,000 / $5,700 = 4.04, not 0.24.