American Furniture Company has an accounts receivable turnover ratio of 20 while the industry average is 10.What can be said about American Furniture Company's accounts receivable turnover ratio?
A)American Furniture Company collects accounts receivable slower than the industry average.
B)American Furniture Company collects accounts receivable faster than the industry average.
C)American Furniture Company may have a credit policy that is too lenient in granting credit to new customers.
D)American Furniture Company may have a lax credit department.

Question

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American Furniture Company has a higher accounts receivable turnover ratio compared to the industry average, which means that they collect accounts receivable faster than the industry average. A higher accounts receivable turnover ratio indicates that the company is efficient in collecting its outstanding payments from customers.

American Furniture Company Has an Accounts Receivable Turnover Ratio of 20