The quality of receivables refers to:
A) The creditworthiness of sellers.
B) The speed of collection.
C) The likelihood of collection without loss.
D) Sales turnover.
E) The interest rate.

Question

Quizplus · Accepted Answer

The quality of receivables refers to the likelihood of collection without loss, meaning how likely it is that the company will be able to collect payment from its customers without having to write off bad debts. Factors such as creditworthiness of sellers and speed of collection may impact the quality of receivables, but ultimately it comes down to the likelihood of collection without loss. Sales turnover and interest rate are not necessarily indicators of receivables quality.

The Quality of Receivables Refers To