The average number of days it takes a practice to convert its accounts receivable into cash is called ________.

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Multiple Choice

The average number of days it takes a practice to convert its accounts receivable into cash is called ________.

Days Sales Outstanding is the measure that expresses how long, on average, it takes to convert credit sales into cash. It directly answers the question of the average number of days to collect accounts receivable. You can calculate it as the average accounts receivable divided by the average daily credit sales, or, for a period, as 365 divided by AR turnover. AR turnover shows how many times receivables are collected in a year, but it’s a rate (times per period) rather than a duration, so it’s not expressed in days. Revenue cycle time is a broader concept that covers the entire process from service delivery to final payment and isn’t the specific AR collection days metric. So the metric that matches the description—an average number of days to convert receivables to cash—is Days Sales Outstanding.

Days Sales Outstanding is the measure that expresses how long, on average, it takes to convert credit sales into cash. It directly answers the question of the average number of days to collect accounts receivable. You can calculate it as the average accounts receivable divided by the average daily credit sales, or, for a period, as 365 divided by AR turnover. AR turnover shows how many times receivables are collected in a year, but it’s a rate (times per period) rather than a duration, so it’s not expressed in days. Revenue cycle time is a broader concept that covers the entire process from service delivery to final payment and isn’t the specific AR collection days metric. So the metric that matches the description—an average number of days to convert receivables to cash—is Days Sales Outstanding.

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