The Days' Sales in Receivables Ratio Gives an Indication of the Length

question 22

True/False

The days' sales in receivables ratio gives an indication of the length of time that the receivables have been outstanding at the end of the year.This indication can be misleading if sales are seasonal and/or the company uses a natural business year.

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Definitions:

Accounting Rate of Return

A financial ratio that measures the expected profitability of an investment, calculated as the average annual profit divided by the initial investment cost.

Low Level Managers

Managers who operate at the lowest tier of an organization's hierarchy, typically overseeing the work of non-managerial employees and focusing on day-to-day operations.

Discounted Payback

A capital budgeting method that calculates the amount of time required to recoup the initial investment in present value terms.

Pre-Specified Number

A fixed number that has been determined beforehand, often used in contracts, agreements, or computational formulas.