Question

Two financial measures that are especially useful in evaluating efficiency in collecting receivables are the a. accounts receivable turnover and the days' sales in receivables. b. accounts receivable turnover and the ratio of cash to monthly cash expenses. c. days' sales in receivables and the profit margin on sales. d. accounts receivable turnover and the profit margin on sales.

Answer 1

Answer:

a. accounts receivable turnover and the days' sales in receivables.

Explanation:

While evaluating efficiency in collecting the accounts receivables, we use two important ratios, Accounts receivables turnover ratio is used to calculate the efficiency of the company for allowing credit period on sales.

Days sales in receivables calculate the average sales day's for each credit sales.

These ratios together help to calculate, the number of days in accounts receivables and net credit sales efficiency in terms of credit period and collection from receivables.

Therefore, correct option is

a. accounts receivable turnover and the days' sales in receivables.