Which of the Following Items Is a Measure of a Company's

question 157

Multiple Choice

Which of the following items is a measure of a company's ability to collect receivables?

• A) inventory turnover ratio
• B) current ratio
• C) days' sales in receivables
• D) account receivable balance

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Definitions:

Liquidity

A measure of how quickly and easily assets can be converted into cash without significant loss in value.

Accounts Receivable

Funds that clients owe to a company for products or services delivered on credit.

Gross Profit

The financial metric resulting from subtracting the cost of goods sold from net sales revenue.

Operating Expenses

Operating expenses are costs associated with the day-to-day functions of a business, excluding direct production costs but including things like rent, utilities, and staff wages.