MANAGEMENT

Detailed explanation-1: -The receivables turnover ratio measures the efficiency with which a company is able to collect on its receivables or the credit it extends to customers. The ratio also measures how many times a company’s receivables are converted to cash in a certain period of time.

Detailed explanation-2: -Accounts receivable turnover is a liquidity ratio that measures how quickly a company can collect its receivables. It is calculated by dividing the annual net sales by the average accounts receivable. This ratio tells you how efficiently a company is collecting its receivables.

Detailed explanation-3: -Accounts receivable turnover ratio, also known as receivables turnover ratio or debtor’s turnover ratio, is a measure of efficiency. It refers to the number of times during a given period (e.g., a month, quarter, or year) the company collected its average accounts receivable.

Detailed explanation-4: -Accounts receivable ratios are indicators of a company’s ability to efficiently collect accounts receivable and the rate at which their customers pay off their debts. Although numbers vary across industries, higher ratios are often preferable as they suggest faster turnover and healthier cash flow.

Detailed explanation-5: -A liquidity ratio is used to determine a company’s ability to pay its short-term debt obligations. The three main liquidity ratios are the current ratio, quick ratio, and cash ratio.