Which of the Following Statements Is True

question 7

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 above.

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Definitions:

Long-term Assets

Assets that are expected to provide economic value beyond one year, such as property, plant, and equipment.

Current Liabilities

Financial obligations a company is required to pay within one fiscal year or its operating cycle, whichever is longer.

Current Ratio

Measures a company's ability to pay short-term obligations with its short-term assets.

Market Ratio

A financial ratio used to evaluate the performance, value, and profitability of a company within the marketplace.