The measure of a company's ability to collect cash from its customers who purchase on account is the A. accounts payable turnover. B. cash conversion cycle. C. days' payable outstanding. D. accounts receivable turnover.

Question

Puppy

Business

6 October, 19:29

The measure of a company's ability to collect cash from its customers who purchase on account is the A. accounts payable turnover. B. cash conversion cycle. C. days' payable outstanding. D. accounts receivable turnover.

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Kian Owen · Answer 1

D. accounts receivable turnover.

Explanation:

Accounts receivable turnover is the a financial indicator that shows the number of times that an entity collects its average accounts receivable in a year. It is used to assess the company's to ability to makes sales on account to its customers and collect payments from them timely.

It is calculated as

Accounts receivables turnover

= Net Annual Credit Sales / ((Beginning Accounts Receivable + Ending Accounts Receivable) / 2)