A HIGH receivable turnover ratio indicates
A) customers are making payments very quickly.
B)customers are making payments slowly.
C)the company's sales are increasing.
D) the company should go out of business.
Answer: Option ( A ) Customers are making payments very quickly.
Explanation:
Accounts receivable turn over ratio is used to calculate how many times amount is collected up on the goods sold on credit. As this ratio is high it assumes that the company is good at collecting payments. So if this ratio is high it can be assume that customers are making payment very quickly.
Formula: Accounts receivable turnover ratio = Net Sales / Average accounts receivable.
A HIGH receivable turnover ratio indicates A) customers are making payments very quickly. B)customers are making...
Required: 1a. For both companies compute the (a) current ratio, (b) acid-test ratio, (c) accounts receivable turnover, (d) inventory turnover, (e) days' sales in inventory, and (f) days' sales uncollected. (Do not round intermediate calculations.) 1b. Identify the company you consider to be the better short-term credit risk.
Kerwick Company had accounts receivable of $100,000 on January
1, 2017. The only transactions that affected accounts receivable
during 2017 were net credit sales of $1,000,000, cash collections
of $92,000 and accounts written off of $30,000.
a) Compute the ending balance of accounts receivable.
b) Compute the accounts receivable turnover for 2017.
c) Compute the average collection period in days.
(a) Beginning Accounts Receivable ADD: Net Credit Sales $ 100,000 $1,000,000 $150,000 Ending Accounts Receivable (b) Show your calculation below...
5. 5. The current ratio measures: A) The ability of a company to quickly sell its inventory to customers. B) The amount of profits retained in the business. C) The ability of a company to quickly collect cash from customers. D) The ability of a company to pay its current obligations.
PART A The accounts receivable turnover ratio Multiple Choice is not useful in determining changes in customer payment patterns. is computed using net credit sales and ending accounts receivable. is computed using net credit sales and average accounts receivable. uses total sales and not just credit sales in the computation. PART B Which of the following is not correct with respect to the debt to assets ratio? Multiple Choice The percentage of long-term debt to assets would be higher for...
25. An acceleration in the collection of receivables will send to cause the accounts receivable turnover to A. Increase B. Decrease C. Remain the same D. Either increase or decrease 26. Which of the following ratios provides a measure that shows the margin of safety of bondholders and also gives an indication of the potential ability of a business to borrow additional funds on a long-term basis? A Asset turnover ratio. B. Number of days' sales in receivable. C. Return on stockholders' equity...
Manufacturing firms are most likely to have a lower ___________ ratio than retailers a) accounts receivable turnover b) inventory turnover c) return on total assets d) none of the above
Question 2. Anestation Hati Below are the ratio of Heta firm in 2013 & 2014 Account receivable turnover 2016 Day's in Inventory 9 75days 1 days Indicate whether both the above ratios are favorable o unfavorable in 2014 compared to 2013 and why? (2 marks) b. Explain what you understand from the trend of account receivable turnover ratio (2 marks) (2 marks) while down two sugestions to other company in the industry to improve their account receivable turnover ratio. Explain...
An increasing inventory turnover ratio indicates that a company: has reduced the time it takes to purchase and sell inventory. is having trouble selling its inventory. may be holding too much inventory. is selling inventory at a higher than normal profit. For the year ended December 31, ABC Company cost of goods sold was $48,000. Inventory at the beginning of the year was $6,000. Ending inventory was $10,000. Compute inventory turnover for the year. 8.0 4.8 8.4 6.0 Firms are...
Your friend owns a small business and she asks for your advice. For the past couple of years, her company has extended credit to its customers. She wonders how well her company manages its accounts receivable. During the most recent year, your friend's company had net credit sales of $743,000. Net Accounts receivable at the beginning of the year was $82,000. Ending net Accounts receivable was $77,000. The company's credit terms are net 30. What should you tell your friend...
In 2014, Wainwright Company has net credit sales of $1,300,000 for the year. It had a beginning accounts receivable (net) balance of $101,000 and an ending accounts receivable (net) balance of $107,000. Compute Wainwright Company's (a) accounts receivable turnover and (b) average collection period in days.