Asked by Diana Torres on May 03, 2024
Verified
Total Payments for the Specific Period ÷ Total Charges (with the write-offs deducted from the total charges)
A) accounting formula
B) accounts receivable ratio formula
C) gross collection ratio formula
D) net collection ratio formula
E) cost ratio formula
F) assets
G) write-offs
H) liabilities
I) accounts receivable
J) income statement
Gross Collection Ratio Formula
A financial metric used to assess the efficiency of a company's collections department, calculated by dividing total collections by the total amount of billable charges.
Total Charges
The complete amount of money required for a particular service, product, or procedure, including all associated costs and fees.
- Apply accounting equations to analyze the economic condition and performance metrics of a business.
Verified Answer
ZK
Zybrea KnightMay 05, 2024
Final Answer :
D
Explanation :
The net collection ratio formula calculates the percentage of receivables collected by a business. It is determined by dividing the total payments received for a specific period by the total charges, after deducting write-offs from the total charges. This ratio helps in assessing the efficiency of a company's collection process and its financial health.
Learning Objectives
- Apply accounting equations to analyze the economic condition and performance metrics of a business.