What are the receivables turnover and inventory turnover used to analyze?
A)Solvency
B)Profitability
C)Liquidity
D)Leverage

Question

Quizplus · Accepted Answer

Receivables turnover and inventory turnover are both used to analyze liquidity, as they measure how quickly a company can convert its assets into cash. Receivables turnover measures how quickly a company collects its accounts receivable, while inventory turnover measures how quickly a company sells its inventory. A high turnover ratio for both receivables and inventory indicates that a company is able to generate cash quickly, which is a good sign for liquidity.

What Are the Receivables Turnover and Inventory Turnover Used to Analyze