Days' Sales in Receivables Can Be Computed in Two Logical

question 55

Multiple Choice

Days' sales in receivables can be computed in two logical steps.In the second step:

• A)the collection period must be determined.
• B)the average daily sales are computed.
• C)the average daily sales are divided by the average net receivables.
• D)the average net receivables are divided by the average daily sales.

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Definitions:

Excess Reserves

The funds that banks hold over and above the legal requirement set by a central bank or banking regulator.

Commercial Bank

A firm that engages in the business of banking, accepting deposits, offering checking accounts, and making loans.

Deposit Expansion Multiplier

A ratio that measures the potential increase in money supply from an initial deposit through the banking system's ability to lend and create money.

Reserve Requirement

The minimum amount of reserves a bank must hold against its deposits, as mandated by monetary authorities, to ensure banking stability.