Asked by Sticky Mochi on Jul 08, 2024
Verified
The number of days' sales in receivables is one means of expressing the relationship between average daily sales and accounts receivable.
Days' Sales
A financial metric that estimates the average time it takes for a company to collect cash from its customers after a sale has been made, often related to inventory turnover.
Receivables
Financial assets representing money owed to an entity by others for goods delivered or services provided on credit.
- Understand the significance and calculation of financial ratios such as days' sales in receivables, inventory turnover, and return on assets.
Verified Answer
RT
Ramesh ThumulaJul 09, 2024
Final Answer :
True
Explanation :
The number of days' sales in receivables is calculated by dividing the accounts receivable by the average daily sales. It represents the number of days it takes on average for a company to collect payments from its customers.
Learning Objectives
- Understand the significance and calculation of financial ratios such as days' sales in receivables, inventory turnover, and return on assets.
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