Which of the following would best explain an increase in receivables turnover?
A)The company adopted new credit policies last year and began offering credit to customers with weak credit histories.
B)Due to problems with an error in its old credit system, the company had accumulated a substantial amount of uncollectible accounts and wrote off a large amount of its receivables.
C)To match the terms offered by its closest competitor, the company adopted new payment terms now requiring net payment within 30 days rather than 15 days, which had been its previous requirement.
D)To keep its share price from falling in a highly competitive market, the company began to recognize revenues from their distributors upon delivery instead of waiting until the right to return period has passed.

Question

Quizplus · Accepted Answer

An increase in receivables turnover could be due to writing off a large amount of uncollectible accounts, as this action would decrease the accounts receivable balance, potentially increasing the turnover ratio if sales remain constant or increase.

Which of the Following Would Best Explain an Increase in Receivables