An extremely high accounts receivable turnover might indicate that:
A) accounts receivable balances have been overstated
B) the company is unsuccessful in its efforts to collect cash from customers
C) policies for extending credit to customers are too tight
D) net credit sales for the year have been understated

Question

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An extremely high accounts receivable turnover indicates that a company collects its receivables very quickly, often due to strict credit policies that limit sales on credit to only those customers who can pay quickly. This can suggest that the company's policies for extending credit are too tight, potentially limiting sales by not offering credit terms to a wider range of customers.

An Extremely High Accounts Receivable Turnover Might Indicate That