Which of the following statements is generally incorrect?
A)A 30-day average collection period for accounts receivable is generally preferred over a 20-day average collection period.
B)A 2:1 current ratio is generally preferred over a 1:1 current ratio.
C)A 5% dividend yield is generally preferred over a 3% dividend yield.
D)A 10% net margin is generally preferred over an 8% net margin.

Question

Quizplus · Accepted Answer

Generally, a shorter average collection period for accounts receivable is preferred as it implies that the company is collecting its dues faster. This helps in improving cash flow and reduces the risk of bad debts. Therefore, a 20-day average collection period is generally preferred over a 30-day average collection period.

Which of the Following Statements Is Generally Incorrect