Which of the Following Statements About the Interpretation of the Receivables

question 158

Multiple Choice

Which of the following statements about the interpretation of the receivables turnover ratio is not correct?

• A) Analysts often interpret a sudden increase in the receivables turnover ratio as a signal of a developing problem.
• B) The smaller the receivables turnover ratio the larger the days to collect will be.
• C) A change in the receivables turnover ratio may indicate a change in the company's credit granting policies.
• D) A change in the receivables turnover ratio may indicate a change in economic conditions.

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Definitions:

Specific Number

An exact quantity or numerical value identified or required.

Employee Evaluation

A systematic process of assessing and reviewing an employee's performance on the job and his or her potential for future development.

Raise

An increase in salary or wages, often awarded to employees based on performance or as a cost-of-living adjustment.

Bank Reconciliation

A process that explains the difference between the bank balance shown in an organization's bank statement, as provided by the bank, and the corresponding amount shown in the organization's own accounting records at a particular point in time.