What does the Receivable Turnover ratio indicate?

The Receivable Turnover ratio is a financial metric that measures how efficiently a company collects on its accounts receivable. It indicates how many times a company's receivables are converted into cash within a specific period, typically a year. A higher ratio suggests that the company is effective in collecting its outstanding credit payments from customers, which can lead to improved cash flow and liquidity.

This ratio is important for assessing the efficiency of a company’s credit policies and overall financial health. It reflects the company's credit risk management, customer payment behavior, and can provide insight into the effectiveness of the company's sales strategies and relationship with its customers. Therefore, the correct answer highlights the primary focus of the Receivable Turnover ratio, which is the efficiency of collecting credit payments.