Accounts Receivable Turnover Measures

question 259

Multiple Choice

Accounts receivable turnover measures

• A)How often a company converts its average accounts receivable into cash during the period
• B)How long it takes to sell inventory on credit
• C)The relationship of cash sales to credit sales
• D)How long it takes to sell inventory on credit and how often a company converts its average accounts receivable into cash during the period
• E)How often a company converts its average accounts receivable into cash during the period and the relationship of cash sales to credit sales

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Definitions:

Risk Premiums

The additional return demanded by investors for taking on higher risk, over and above the risk-free rate of return.

Real Risk-Free Rate

The interest rate on a risk-free asset, after adjusting for inflation, indicating the true return on a risk-free investment.

Inflationary Expectations

Anticipations of future inflation that can influence economic behaviors in the present.

Default Risk Premium

The additional amount a borrower must pay to compensate the lender for assuming the risk that the borrower may default on the loan.