Companies A and B both report net income growth of 12% per year. Company A has a receivables turnover ratio of 5.6, which is smaller than its previous year. Company B has a receivables turnover ratio of 11.3, which is higher than its previous year. All other things equal:
A) Company A appears to be better managed.
B) Company A will have the lower days-to-collect measure.
C) Company B appears to be better managed.
D) Company B's days-to-collect measure is rising.

Question

Quizplus · Accepted Answer

Company B's higher and improving receivables turnover ratio suggests it is collecting receivables more efficiently, indicating better management.

Companies a and B Both Report Net Income Growth of 12