Days' Sales Outstanding Can Be Computed in Two Logical Steps

question 48

Multiple Choice

Days' sales outstanding 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:

Required Return

The minimum rate of return an investor expects to receive on an investment, considering its risk.

Financial Break-Even

The point at which total revenues equal total expenses, leading to a net income of zero.

Initial Investment

The amount of money used to start a project, investment, or venture.

Depreciation

The reduction in value of an asset over time, often due to wear and tear or obsolescence.