Companies a and B Both Report Net Income Growth of 12

question 17

Multiple Choice

Companies A and B both report net income growth of 12% per year. Company A has a receivables turnover ratio of 5.6, which is smaller than its previous year. Company B has a receivables turnover ratio of 11.3, which is higher than its previous year. All other things equal:

• A) Company A appears to be better managed.
• B) Company A will have the lower days-to-collect measure.
• C) Company B appears to be better managed.
• D) Company B's days-to-collect measure is rising.

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Definitions:

Beginning Inventory

The estimated financial value of items ready to be sold at the onset of a ledger year.

Balance Sheet

A financial statement that provides a snapshot of a company's financial condition at a specific moment, showing assets, liabilities, and shareholders' equity.

Adjusted Trial Balance

A statement listing all accounts and their balances after adjustments, used to verify the equality of debits and credits before generating financial statements.

Financial Statement Column(s)

Specific sections within financial statements that organize and present data in a structured manner, facilitating analysis and comparison.