The Days- To- Collect Increases from 32 to 48

question 28

Multiple Choice

The days- to- collect increases from 32 to 48.Which of the following statements is true?

• A)The company is likely to see its bad debt expense fall.
• B)The receivables turnover rate rises by 50%.
• C)The company is becoming more efficient at collecting payment.
• D)The receivables turnover rate falls from approximately 11.4 to 7.6.

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Definitions:

Equity Method

An accounting technique used for recording investments in which the investor has significant influence over the investee but does not have full control.

Significant Influence

A situation in which an investor has the power to participate in the financial and operating policy decisions of an investee, but not control over them.

Operating And Financial Policies

Operating and financial policies are the strategies and guidelines that a company follows in its daily activities and financial decision-making processes.

Return On Excess Cash

A measure of how effectively a company is using its idle cash, beyond what is needed for its immediate operating needs, to generate returns.