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 being 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

A higher receivables turnover ratio indicates that Company B is collecting its receivables more efficiently than Company A, suggesting better management of receivables.

Companies a and B Both Report Net Income Growth of 12