During 2012, the Accounts Receivable Turnover Ratio for Upward Company

question 76

Multiple Choice

During 2012, the accounts receivable turnover ratio for Upward Company increased from 10 to 15 times per year. Which one of the following statements is the most likely explanation for the change?

• A) The company's credit department has followed up with customers whose account balances are past due in order to generate quicker collections.
• B) The company has decreased sales to its most credit worthy customers.
• C) The company has increased the amount of time customers have to pay their accounts before they are past due.
• D) The company has extended credit to more risky customers in order to increase the accounts receivable turnover ratio.

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Definitions:

Monopoly Profits

The excess profits earned by a monopoly as a result of its ability to set price above marginal costs due to lack of competition.

Duopoly

A market structure dominated by two firms, each of which has significant control over the market price.

Demand Curves

Graphical representations showing the relationship between the price of a good and the quantity of that good consumers are willing and able to purchase at different prices.

Marginal Revenue Curve

A graphical representation showing how marginal revenue varies as the quantity of output sold changes, typically downwards sloping for firms in imperfectly competitive markets.