In Addition to Days' Sales in Receivables and Days' Sales

question 324

Multiple Choice

In addition to days' sales in receivables and days' sales in inventory we could calculate "days' sales in payables" by computing the accounts payable turnover and dividing it into 365 days. In words, what do these ratios tell us?

• A) The number of days it takes before the current ratio falls to zero.
• B) The number of days of sales needed to make a profit.
• C) The time it takes to completely replace total current assets.
• D) The rate at which assets are replaced.
• E) How long it takes, on average, to entirely deplete these accounts.

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