Which one of the following statements is NOT true?
A) The accounts receivables turnover ratio measures how quickly the company collects on its credit sales.
B) One ratio that measures the efficiency of a company's collection policy is days' sales outstanding (DSO).
C) The more days that it takes the company to collect on its receivables, the more efficient the company is.
D) DSO measures in days, the time the company takes to convert its receivables into cash.

Question

Quizplus · Accepted Answer

This statement is not true. The more days it takes the company to collect on its receivables, the less efficient the company is. A company with a shorter DSO or a higher accounts receivable turnover ratio is collecting its receivables more quickly and efficiently.

Which One of the Following Statements Is NOT True