Which of the Following Statements Regarding the Receivables Turnover Ratio

question 32

Multiple Choice

Which of the following statements regarding the receivables turnover ratio is true?

• A) The receivables turnover ratio indicates how many times, on average, the process of selling to and collecting from customers occurs during the accounting period.
• B) Companies of similar size operating in the same country tend to have similar receivables turnover ratios.
• C) A high turnover ratio may suggest the company is allowing too much time for customers to pay.
• D) The receivables turnover ratio is used to calculate the days to collect by dividing the turnover ratio by 365

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Definitions:

Capital

Capital refers to financial assets or the financial value of assets, such as funds held in deposit accounts as well as the physical factors of production.

Opportunity Cost

The value of the best alternative that is forgone when a choice is made between several mutually exclusive alternatives.

Bowed Outward

Describes a curve (such as in production possibilities frontier) that shows increasing opportunity costs for producing two goods.

Capital

Assets with monetary value, including cash and commodities, which are utilized to produce income or accumulate wealth.