When a company has a high accounts receivable turnover in comparison with competitors suggests that the firm should tighten its credit policy.

Question

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A high accounts receivable turnover indicates that the company is collecting its receivables quickly, which is a positive sign. It does not necessarily mean that the company should tighten its credit policy. In fact, it could mean that the company has a strong credit policy that allows it to collect its receivables promptly.

When a Company Has a High Accounts Receivable Turnover in Comparison