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1. Which ratio indicates the effectiveness of a​ company's credit extension​ policy? A. days inventory on...

1. Which ratio indicates the effectiveness of a​ company's credit extension​ policy?

A.

days inventory on hand

B.

accounts payable turnover

C.

inventory turnover

D.

days sales outstanding

2.

Simmons, Inc. uses​ lower-of-cost-or-net-realizable-value to value its inventory and reports under IFRS. Data regarding an item in its inventory is as​ follows:

Cost

$26

Replacement cost

20

Selling price

30

Cost of completion and disposal

2

Normal profit margin

7

What is the​ lower-of-cost-or-net-realizable-value for this​ item?

A.

​$18

B.

​$26

C.

​$28

D.

​$30

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Answer #1

Answer to Q#1 (First question in the list Option-(D): days sales outstanding Reason: -> Accounts Receivable Turnover is a measure used to quantify a firms effectiveness in extending credit as well as collecting debts. > Days sales outstanding # Days in a year / Accounts Receivable Turnover. >So, Days sales outstanding indicates the effectiveness of a companys credit extension policy.

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