Companies a and B Both Report Net Income Growth of 12

question 110

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 lower last year.Company B has a receivables turnover ratio of 11.3,which is higher than last year.All other things being equal:

• A) Company A is more effectively managing its receivables.
• B) Company B is more effectively managing its receivables.
• C) Company A's days to collect is lower than Company B's in both years.
• D) Company B's days to collect increased.

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Definitions:

Scientific Knowledge

Information gained through systematic observation, experimentation, and reasoning in the sciences, leading to understandings and predictions about the natural world.

Research

The systematic investigation into and study of materials and sources in order to establish facts and reach new conclusions.

R&D Expenditures

Costs associated with the research and development activities of a company to innovate or improve products or services.

Expected-Rate-Of-Return

The anticipated return on an investment, expressed as a percentage of the total amount invested.