The Accounts Receivable Turnover Ratio Measures

question 49

Multiple Choice

The accounts receivable turnover ratio measures:

• A)how well a company can pay its current liabilities with its current assets.
• B)how many days it takes, on average, to collect receivables.
• C)how many days it takes, on average, to sell the inventory.
• D)the times a company collects accounts receivable in a year.

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Definitions:

Departmental Overhead Rates

Rates used to allocate indirect costs to specific departments, based on departmental activities, to accurately assess their expenses.

Product Diversity

The range of different products or services that a company offers to meet varying customer needs and preferences.

Plantwide Predetermined Overhead Rate

A single overhead rate calculated by dividing total estimated overhead costs by an estimated allocation base for the entire plant.

Direct Labor-hours

The sum of hours spent by staff actively involved in the process of manufacturing.