What is calculated by dividing Net Sales by Average Accounts Receivable?

The correct choice is a calculation that specifically measures how efficiently a company uses its assets to generate sales, particularly how well it manages its accounts receivable. By dividing Net Sales by Average Accounts Receivable, this metric reveals the rate at which a company collects its outstanding credit sales.

A higher accounts receivable turnover ratio indicates more efficient management of receivables, suggesting that the company is able to quickly collect cash from its credit sales. Conversely, a lower ratio could imply problems in collecting payments, which can affect cash flow.

The other options represent different financial metrics. The Gross Margin Ratio is concerned with profitability relative to sales, rather than receivables. Days Sales in Accounts Receivable involves calculating how many days it takes on average to collect receivables but is derived from the turnover ratio as a second-step calculation. The Debt to Equity Ratio measures financial leverage, focusing on the relationship between a company's liabilities and its equity, unrelated to sales collection efficiency.