How Is the Accounts Receivable Turnover Ratio Computed

question 48

Multiple Choice

How is the accounts receivable turnover ratio computed?

• A)Sales ÷ Net accounts receivable
• B)Net accounts receivable ÷ Sales
• C)Cost of goods sold ÷ Inventory
• D)365 days ÷ Net accounts receivable

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Definitions:

Differential Income

Differential income refers to the change in income streams that could result from choosing one option over another in making financial or business decisions.

Property Taxes

Taxes levied by local governments on real and personal property based on the assessed value of the property, used to fund public services.

Lease Agreement

A contract between a lessor and lessee that outlines the terms under which property is rented.

Depreciated

Refers to an asset that has decreased in value over time, typically due to wear and tear or obsolescence.