Which of the following statements is generally considered desirable?
A) A large decrease in accounts receivable turnover ratio
B) A decrease in the number of days' sales in receivables
C) An increase in sales along with a larger decrease in the gross profit ratio
D) A decrease in the cash flow from operations to current liabilities ratio

Question

Quizplus · Accepted Answer

A decrease in the number of days' sales in receivables indicates that a company is collecting its accounts receivable more quickly, which is generally considered desirable as it improves cash flow and reduces the risk of bad debt. The other statements suggest negative trends, such as decreased profitability or liquidity.

Which of the Following Statements Is Generally Considered Desirable