BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Date of Receivables-the date on which payment is received for the service provided
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Delay of Receivables-an explanation of why the receivables are delayed
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Designation of Receivables-an explanation of what the receivables are
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Days of Receivables-Service to Cash measure-How long does it take to get paid after service is provided
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Detailed explanation-1: -The average collection period, therefore, would be 36.5 days. This is not a bad figure, considering most companies collect within 30 days. Collecting its receivables in a relatively short and reasonable period of time gives the company time to pay off its obligations.
Detailed explanation-2: -There is no fixed timetable for paying back accounts receivables, but they are generally due in 30, 45, or 60 days. Businesses only offer these buy-now, pay-later programs to credit-worthy individuals, with track records of responsibly paying off their debts in an expeditious manner.
Detailed explanation-3: -How is DSO calculated? Days Sales Outstanding = (Accounts Receivable/Net Credit Sales)x Number of days.
Detailed explanation-4: -Receivables turnover is a measure of how quickly a company collects its receivables. This is calculated by dividing the company’s total net credit sales by its average accounts receivable balance, and then multiplying this by 365.