A High Accounts Receivable Turnover Ratio Indicates

question 51

Multiple Choice

A high accounts receivable turnover ratio indicates

• A)the company's sales are increasing.
• B)a large proportion of the company's sales are on credit.
• C)customers are making payments very quickly.
• D)customers are making payments slowly.

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Definitions:

Leverage Ratios

Financial ratios that measure the amount of capital coming from debt and assess the ability of a company to meet financial obligations.

Liquidity Ratios

Financial metrics used to assess a company's ability to meet its short-term obligations, indicating how quickly assets can be converted into cash.

Debt Ratio

A financial ratio that measures the extent of a company's leverage, calculated as the company's total liabilities divided by its total assets.

Total Debts

The sum of all financial obligations or liabilities owed by an individual, organization, or country.