Which of the Following Statements Is True

question 21

Multiple Choice

Which of the following statements is true?

• A)The receivables turnover ratio indicates the average number of times the company completes the selling and collecting cycle during the year.
• B)The days-to-collect measure is 365 divided by the receivables turnover ratio.
• C)The receivables turnover ratio and days-to-collect measure move in opposite directions.
• D)All of the answers are acceptable.

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Definitions:

Shortage/Surplus

A situation where the quantity of a good demanded exceeds the quantity supplied (shortage) or the quantity supplied exceeds the quantity demanded (surplus).

Price Ceiling

A cap set by the government on the maximum price that can be asked for a good, service, or commodity.

Shortage/Surplus

An economic condition where the quantity demanded is greater than (shortage) or less than (surplus) the quantity supplied at the market price.

Demand Equation

A mathematical representation of the relationship between the quantity of a good demanded and its price.