In 2012, C Co's Receivables Turnover Ratio and Days' Sales

question 123

Multiple Choice

In 2012, C Co's receivables turnover ratio and days' sales in receivables was 11.43 times and 31.9 days. In 2012, P Co's receivables turnover ratio and days' sales in receivables was 9.71 times and 37.6 days. Which of the following statements is false?

• A) P Co's lower turnover ratio has an inverse relationship to its days' sales tied up in receivables.
• B) C Co's management has done a better job of managing their receivables.
• C) C Co appears to be more profitable than P Co.
• D) The higher turnover ratio for C Co hurts their liquidity.

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