Which of the following is a sign that a company can quickly turn its receivables into cash?
A)A low receivables turnover ratio.
B)A high receivables turnover ratio.
C)A high average collection period.
D)Both a low receivables turnover ratio and a high average collection period.

Question

Quizplus · Accepted Answer

A high receivables turnover ratio indicates that a company can quickly turn its receivables into cash. The ratio is calculated as net credit sales divided by average accounts receivable, and a higher ratio means that the company is collecting cash from its customers at a faster rate. A low receivables turnover ratio and a high average collection period both indicate difficulties in collecting cash from customers.

Which of the Following Is a Sign That a Company