Judging only from the ratios given,which of the following clothing wholesalers is least likely to have cash flow problems?
A)Company A,who has a receivables turnover of 5,and an inventory turnover of 2
B)Company B,who has a receivables turnover of 2,and an inventory turnover of 5
C)Company C,who has a receivables turnover of 10,and an inventory turnover of 10
D)Company D,who has a receivables turnover of 1,and an inventory turnover of 1

Question

Quizplus · Accepted Answer

Company C has the highest receivables turnover and inventory turnover ratios, indicating that they are able to collect on their accounts receivable and sell their inventory quickly. This suggests that they are managing their cash flow effectively and are less likely to have cash flow problems. Company D, on the other hand, has the lowest ratios, indicating that they may have trouble collecting on their accounts receivable and selling their inventory quickly, which increases the likelihood of cash flow problems. Companies A and B have varying strengths and weaknesses in their ratios, but do not stand out as the best choice overall.

Judging Only from the Ratios Given,which of the Following Clothing