Which Ratio Measures the Ability of a Company to Collect

question 42

Multiple Choice

Which ratio measures the ability of a company to collect receivables?

• A)Inventory turnover ratio
• B)Current ratio
• C)Day's sales in receivables
• D)Acid-test ratio

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Definitions:

Equilibrium Quantity

The quantity of goods or services supplied and demanded at the equilibrium price, where the quantity supplied equals the quantity demanded.

Demand Equation

A mathematical representation of the relationship between the quantity of a good demanded and various factors affecting it such as price, income, and the price of related goods.

Downsloping Demand

A concept in economics that describes the inverse relationship between the price of a good and the quantity demanded, typically illustrated by a downward-sloping demand curve.

Upsloping Supply

A supply curve that shows an increase in the quantity supplied as the price increases, typical of most goods.