The Accounts Receivable Turnover Ratio Measures ________

question 158

Multiple Choice

The accounts receivable turnover ratio measures ________.

• A) a company's ability to 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 number of times a company collects the average accounts receivable balance in a year

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Definitions:

Cash Balance

The amount of cash a company or individual has available after all transactions have been accounted for.

Checks

Written, dated, and signed instruments that direct a bank to pay a specific sum of money to the bearer.

First National Bank

A commonly used name for banks in various countries, typically indicating it was the first bank chartered under national laws.

Deposit Slip

A document that accompanies bank deposits, detailing the amount of cash and/or checks being deposited.