Since receivables and payables both result from sales transactions, a firm with a high receivables-to-sales ratio must also have a high payables-to-sales ratio.

Question

Quizplus · Accepted Answer

The statement is false. Receivables and payables are not directly correlated, and having a high receivables-to-sales ratio does not necessarily mean that a firm has a high payables-to-sales ratio. It is possible for a company to have a high receivables-to-sales ratio and a low payables-to-sales ratio, or vice versa, depending on factors such as payment terms and business practices.

Since Receivables and Payables Both Result from Sales Transactions, a Firm