Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 7 - Cash and Receivables - Review and Practice - Questions - Page 363: 22


Accounts receivable turnover ratio is calculated by dividing the net sales by receivables outstanding during the year. It is used to evaluate the level of liquidity affiliated with a certain class of receivables. It evaluates the number of times receivables are collected during the period on average.

Work Step by Step

Accounts receivable turnover ratio also avails some indication of the quality of the receivables and success level of collection by the company.
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