Which of the following is a sign that a company can quickly turn its receivables into cash?
A)A low receivables turnover ratio.
B)A high receivables turnover ratio.
C)A high average collection period.

Question

Quizplus · Accepted Answer

A high receivables turnover ratio indicates that a company is able to quickly collect its accounts receivables and turn them into cash. This is a positive sign of a company's liquidity and ability to manage its cash flow effectively. A low receivables turnover ratio or a high average collection period would indicate the opposite, that the company struggles to convert its receivables into cash in a timely manner.

Which of the Following Is a Sign That a Company