Which of the following statements regarding the interpretation of the receivables turnover ratio is not true?
A)Analysts often interpret a sudden increase in the receivables turnover ratio as a signal of a developing problem.
B)The smaller the receivables turnover ratio the larger the days to collect will be.
C)A change in the receivables turnover ratio may indicate a change in the company's credit granting policies.
D)A change in the receivables turnover ratio may indicate a change in economic conditions.

Question

Quizplus · Accepted Answer

A sudden increase in the receivables turnover ratio is typically seen as a positive indication of efficient management of accounts receivable. It is more likely that a sudden decrease in the ratio would be seen as a potential problem.

Which of the Following Statements Regarding the Interpretation of the Receivables