A high accounts receivable turnover in comparison with competitors suggests that the firm should tighten its credit policy.

Question

Quizplus · Accepted Answer

A high accounts receivable turnover indicates that a company is collecting its outstanding debts quickly. This is generally viewed as a positive indicator of a company's financial health. Therefore, there is no need to tighten credit policies in such a scenario. In fact, a low turnover ratio indicates that the firm's credit policies may be too lenient and need to be tightened.

A High Accounts Receivable Turnover in Comparison with Competitors Suggests