Which one of the following statements is NOT true?
A) The accounts receivables turnover ratio measures how quickly the firm collects its credit sales.
B) One ratio that measures the efficiency of a firm's collection policy is day's sales outstanding.
C) The more days that it takes a firm to collect on its receivables, the more efficient the firm is.
D) Day's sales outstanding measures in days, the time a firm takes to convert its receivables into cash.

Question

Quizplus · Accepted Answer

The statement "The more days that it takes a firm to collect on its receivables, the more efficient the firm is" is not true. A shorter collection period indicates a more efficient collection policy, as the firm is able to convert its credit sales into cash quickly.

Which One of the Following Statements Is NOT True