The Accounts Receivable Turnover Ratio Is Computed by Dividing

question 1

Multiple Choice

The accounts receivable turnover ratio is computed by dividing

• A) gross sales by ending net receivables.
• B) gross sales by average net receivables.
• C) net sales by ending net receivables.
• D) net sales by average net receivables.

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Definitions:

Current Year

The ongoing year or period that is currently being accounted for or considered, often in contrast to previous or future years.

Stockholders' Equity

Equity interest in a corporation, split into shares and representing ownership in the corporation's assets after liabilities are settled.

Liabilities

Financial obligations or debts that a company owes to others, which can be classified as current (short-term) or non-current (long-term).

Nonpayment

The failure to fulfill a financial obligation, such as not paying a bill, loan, or other types of debt when due.