During 2014, the Accounts Receivable Turnover Rate for Cordner Company

question 111

Multiple Choice

During 2014, the accounts receivable turnover rate for Cordner Company increased from 10 to 14 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 sales.

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Definitions:

Annual Cost

The total expenses associated with maintaining or operating something over the course of a year.

Useful Life

The estimated period over which a fixed asset is expected to be useful to the owning entity, crucial for calculating depreciation.

Machine

Equipment or devices designed to perform specific tasks, often used in manufacturing and production processes.

Internal Rate

Commonly denotes the internal rate of return (IRR), the discount rate at which the net present value (NPV) of all cash flows from a specific project is zero.