The accounts receivable turnover rate: A) Indicates the proportion of a company's accounts receivable that the independent auditors were unable to confirm. B) Indicates how many times the receivables were converted into cash during the year. C) Is computed by dividing average receivables by sales. D) Indicates the average number of days a business waits to make collection on a credit sale

Question

Business

Elle Zimmerman

30 November, 06:34

The accounts receivable turnover rate: A) Indicates the proportion of a company's accounts receivable that the independent auditors were unable to confirm. B) Indicates how many times the receivables were converted into cash during the year. C) Is computed by dividing average receivables by sales. D) Indicates the average number of days a business waits to make collection on a credit sale

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Alfonso Beltran · Answer 1

B) Indicates how many times the receivables were converted into cash during the year.

Explanation:

Account receivable Turnover is a ratio which shows that how many times the account receivable is converted into cash in a given period of time. It shows the efficiency of recovery from customer by a company. A company with higher turnover ratio is considered to more profitable and its liquidity is higher. A company with lower Turnover will have low profits and may face liquidity problems.