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4 May, 05:16

Days' sales in receivables a. is an estimate of the length of time the receivables have been outstanding. b. measures the number of times the receivables turn over each year. c. is calculated as Average Receivables/Sales. d. is not used.

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  1. 4 May, 05:46
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    The answer is a. is an estimate of the length of time the receivables have been outstanding.

    Explanation:

    Days' sales in receivable is calculated as Average sales receivable / total credit sales in the period x number of the in the period.

    The ratio is used to measure how long (in days) it takes for a firm to collect its sales receivable based on its past collection performance.

    Thus, a is chosen.

    The definition in b is referred to Receivable Turnover, thus it is not chosen.

    For c. The formula given is wrong, thus it is not chosen.
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Home » Business » Days' sales in receivables a. is an estimate of the length of time the receivables have been outstanding. b. measures the number of times the receivables turn over each year. c. is calculated as Average Receivables/Sales. d. is not used.
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