XYZ CorpHas Improved Its Average Collection Period from 55 to 40

question 75

Multiple Choice

XYZ Corp.has improved its average collection period from 55 to 40 days.Which one of XYZ's other ratios may appear worse as a result of the improved receivables collection?

• A) Inventory turnover
• B) Quick ratio
• C) Net profit margin
• D) Return on equity

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Definitions:

Price Elasticity Of Demand

Percentage change in quantity demanded of a good resulting from a 1-percent increase in its price.

Marginal Revenue

The extra revenue received from the sale of an additional unit of a product or service.

Elasticity Of Demand

A metric reflecting how demand for a commodity reacts to price adjustments.

Profit-Maximizing Price

The price level at which a company can sell its product to maximize its profit, calculated by understanding demand and cost structures.