A company with sales terms of n/30 would prefer a receivable turnover of:
A)5)
B)20.
C)10.
D)2)
E)All of these choices are equally desirable if sales terms are n/30.

Question

Quizplus · Accepted Answer

A higher receivable turnover ratio indicates that the company is collecting its receivables more frequently throughout the year, which is preferable for cash flow. A turnover of 20 suggests the company collects its receivables about every 18 days (365 days / 20), which is better than n/30 terms, indicating efficient credit and collection processes.

A Company with Sales Terms of N/30 Would Prefer a Receivable