Asked by McKenzie Copher on Jun 18, 2024
Verified
What is the accounts receivable turnover ratio? How is it calculated and how is it used to assess financial condition?
Accounts Receivable Turnover Ratio
A financial metric that measures how efficiently a company collects revenue from its customers by comparing net credit sales to average accounts receivable.
Financial Condition
A description of an entity's financial status, including assets, liabilities, and equity at a specific point in time.
- Calculate and analyze the accounts receivable turnover ratio.
Verified Answer
GK
Gopi Kanth NerellaJun 19, 2024
Final Answer :
The accounts receivable turnover ratio is used to measure how often,on average,receivables are collected during an accounting period.It is calculated by dividing net sales by average accounts receivable.Analysts use the ratio to measure both the quality and liquidity of accounts receivable.Quality refers to the likelihood of collection without loss.Liquidity refers to the speed of collections.
Learning Objectives
- Calculate and analyze the accounts receivable turnover ratio.
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