The Accounts Receivable Turnover Ratio Increased Significantly Over a Two-Year

question 784

Multiple Choice

The accounts receivable turnover ratio increased significantly over a two-year period. This trend could indicate that:

• A) The accounts receivable aging has deteriorated.
• B) The company has eliminated its discount policy.
• C) The company is more aggressively collecting customer accounts.
• D) Customer sales have substantially decreased.

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Definitions:

Interest Rates

The cost of borrowing money, typically expressed as a percentage of the principal, which lenders charge borrowers for the use of their money.

Reserve Requirements

Regulations set by central banks determining the minimum amount of reserves that banks must hold against deposits.

Discount Rate

The interest rate charged to commercial banks and other financial institutions for loans they take from the Federal Reserve's discount window.

Induce

To lead or move by persuasion or influence, often to bring about or provoke a specific action or outcome.