The Number of Days' Sales in Receivables

question 125

Multiple Choice

The number of days' sales in receivables

• A) is an estimate of the length of time the receivables have been outstanding
• B) measures the number of times the receivables turn over each year
• C) is Net Credit Sales divided by Average Receivables
• D) is not meaningful and therefore is not used

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Definitions:

Accounts Payable

Liabilities of a business that are due to creditors within a short period, typically less than a year.

Net Cash

The amount of cash available after all cash inflows and outflows have been accounted for, often within a specific reporting period.

Sale Of Equipment

The act of selling off machinery, tools, or devices used in production or office operations, often recorded as a cash inflow in financial accounts.

Operating Activities

Day-to-day actions conducted by a business to generate income, such as sales, providing services, and other core business operations.