Accounts Receivable Turnover Measures

question 156

Multiple Choice

Accounts receivable turnover measures:

• A) How often a company converts its average accounts receivable into cash during the period and the relationship of cash sales to credit sales.
• B) How often a company converts its average accounts receivable into cash during the period.
• C) The relationship of cash sales to credit sales.
• D) How long it takes to sell inventory on credit.
• E) How long it takes to sell inventory on credit and how often a company converts its average accounts receivable into cash during the period.

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Definitions:

Escrow Settlement

A financial arrangement where a third party temporarily holds and regulates payment of the funds required for two parties involved in a given transaction.

Accountant

A professional responsible for managing and examining financial records and ensuring accuracy and compliance with laws.

Buyer And Seller

Individuals or entities involved in the transaction of goods or services, where the buyer acquires these from the seller in exchange for money.

Terminal Value

An estimate of a company's value at the end of a specific period, often used in discounted cash flow analysis to calculate the present value of all future cash flows.