The number of days' sales in receivables is determined by dividing a. average accounts receivable by average daily sales. b. average accounts receivable by sales. c. the number of days in a year by accounts receivable. d. none of these choices are correct.

d.

Explanation:

Financial Statements depicts the financial position of a firm at a particular point of time or specified date. The users of financial statements use various types of analysis to understand or compare the current financial statements of the company to prior years or with those of the competitors.

‘Ratio Analysis’ is used to analyze the performance of a company. It is used to analyze the liquidity, profitability, solvency and operational efficiency of the company.

Accounts receivable turnover is the ratio of net credit sales to average accounts receivable.  It can be calculated as:

Average accounts receivable =

Accounts turnover ratio =

No. of days of sales in receivables can be derived using the below mentioned formula:

No. of days of sales in receivables =

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