What does a days receivable ratio of 60 indicate about a company?

A days receivable ratio of 60 signifies that, on average, the company takes 60 days to collect payment from its customers after a sale is made. This metric, also known as days sales outstanding (DSO), provides insight into the efficiency of a company's credit and collections processes. A higher days receivable ratio could indicate that a company is experiencing delays in receiving payments, which might impact its cash flow.

This ratio is critical for understanding how quickly a business can convert its sales into cash, which is vital for maintaining operational liquidity. The focus on the average collection period allows stakeholders to gauge how effectively the company is managing its accounts receivable, and it can be benchmarked against industry standards to evaluate performance.

Other options do not accurately reflect the meaning of the days receivable ratio; they pertain to different aspects of financial performance or reporting that are not related to the collection of receivables.