The Number of Days' Sales Uncollected

question 178

Multiple Choice

The number of days' sales uncollected:

• A) Measures a company's ability to pay its bills on time.
• B) Is calculated by dividing accounts receivable by sales.
• C) Is used to evaluate the liquidity of receivables.
• D) Measures a company's debt to income.
• E) Is calculated by dividing sales by accounts receivablE.

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Definitions:

Annual Interest Rate

The annual interest rate is the percentage charged on a loan or paid on an investment for a one-year period, representing the cost of borrowing or the earnings from an investment.

Net Savings

The amount left after subtracting a person's or organization's total expenses from their total income, often accumulated over time.

Discount Period

The time frame between the beginning of a loan or credit term and the date the full payment is due, during which a discount may be offered for early payment.

Aging Schedule

A report categorizing a company's accounts receivable according to the length of time an invoice has been outstanding, used to determine credit and collection policies.