What does the receivables turnover ratio measure?

The receivables turnover ratio is a financial metric that evaluates a company's efficiency in managing and collecting its accounts receivable. This ratio measures how many times, on average, a company collects its outstanding credit accounts during a specified period, typically a year. A high receivables turnover ratio indicates that a company is effective in converting its receivables into cash, suggesting strong cash flow management and potentially fewer bad debts. It is an important indicator of the effectiveness of a company's credit policies and its ability to collect cash due from customers promptly.

In contrast, the other options provided do not align with the specific measurement focus of the receivables turnover ratio. For instance, retaining customers relates more to customer loyalty and satisfaction rather than the efficiency of collecting payments. The growth rate of company debts concerns liabilities and does not pertain to accounts receivable management. Lastly, the overall health of cash reserves involves a company's cash and liquidity position, separate from how well it collects receivables. Thus, the emphasis on efficiency in collecting receivables clearly defines why this choice is the most precise representation of what the receivables turnover ratio assesses.