Question

The accounts receivable turnover is computed by dividing gross sales by ending net receivables. gross sales by average net receivables. net sales by ending net receivables. net sales by average net receivables.

Answer 1

Answer:

The accounts receivable turnover is computed by dividing net sales by average net receivables.

Explanation:

The accounts receivable turnover is used to quantify a company's effectiveness in collecting its receivables from its clients.

Accounts Receivable Turnover =  Net Credit Sales  / Average Accounts Receivable

A high receivables turnover ratio can indicate that a company’s collection of accounts receivable is efficient and a low receivables turnover ratio might be due to a company having a poor collection process.

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