What is measured by days' sales in receivables? Both Smith Enterprises and Jones Enterprises have credit terms of 2/10, net 30. The days' sales in receivables are 40 for Smith Enterprises and 35 for Jones Enterprise. Analyze this information
What will be an ideal response
Days' sales in receivables is a ratio that tells how many days it takes to collect the average level of accounts receivable. Since both Smith and Jones have the same credit terms, the days' sales in receivables should be close to 30 days. Smith has the better ratio and is receiving cash quicker than Jones.
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