Certified Management Accountant 2026 – 400 Free Practice Questions to Pass the Exam

Receivables Turnover measures how efficiently a company collects its accounts receivable or how effectively it utilizes its credit policies. It is calculated by dividing net credit sales by the average accounts receivable during a specific period. This ratio indicates how many times, on average, a company collects its receivables in a given timeframe. A higher ratio suggests that the company is able to collect its debts more frequently within the year, reflecting effective credit management and strong cash flow.

The other options do not accurately capture the intention or calculation of Receivables Turnover. For instance, net sales to total assets measures overall asset efficiency, total sales to operating expenses looks at profitability relative to expenses, and operating income to total liabilities assesses how well a company can cover its obligations with its operating profits. None of these ratios specifically focus on the collection of receivables, which is why the choice regarding net credit sales to average accounts receivable is the correct representation of what Receivables Turnover measures.