The cays saes uncollected ratio measures the liquidity of ac

The cays\' sa\'es uncollected ratio measures the liquidity of accounts receivable 19 True or Faise True False Prine erences

Solution

The answer would be True

Firstly we need to understand what is Day\'s Sales uncollected ratio.

When the business sells goods on credit then it allows its customers certain credit period to pay for the goods they have purchased. This would result in brining the existence of Accounts Receivable in the financial statemets of the business. The Day\'s Sales uncollected shows how long it would take the company to get back the money from the customers who purchased goods on credit.

Days Sales Uncollected Ratio is shown by the formula

(Accounts Receivable / Net Sales) * 365

This ratio helps a business to determine that how long it will take the credit sales made by the business to be realised as cash. This is what the liquidity of Accounts Receivable means.

Therefore it can be concluded that Day\'s Sales uncollected ratio measures the liquidity of Accounts Receivable.