Days Sales Outstanding Calculator Plan Projections
Answer (D) is correct Turnover ratios are activity ratios that measure management s efficiency in using assets However the number of days sales in receivables (days in the year divided by the receivables turnover ratio), also known as the average collection period, and other turnover ratios are a measure of liquidity because these statistics Divide the credit sales by 365 In the example, $1 million divided by 365 equals $2, per day These are the credit sales per day Divide the ending accounts receivable by the credit sales per day to find the average days in receivables In the example, $500,000 divided by $2, per day equals 15 days References
