A High Receivables Turnover Ratio May Indicate That

question 86

Multiple Choice

A high receivables turnover ratio may indicate that

• A)customers are making payments quickly.
• B)a large portion of the company's sales are on credit.
• C)many customers are not paying their receivables.
• D)the company's sales have increased.

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Definitions:

Interest Payments

Payments made to a lender by a borrower in return for the use of borrowed money, typically calculated as a percentage of the principal.

Net New Equity

The difference between equity capital a company raises by issuing new shares and the capital it uses to buy back existing shares.

Dividend Payments

Allocations of a segment of a company's profits, determined by the board of directors, to a category of its stockholders.

Current Liabilities

These are obligations or debts that a company is expected to pay within one year.