Which one of the following is TRUE?
A)Fixed asset turnover represents the contribution of every dollar of assets to credit sales.
B)The inverse of the inventory turnover times 365 estimates the number of days to liquidate inventory.
C)The collection period of receivables and payables cannot be inferred from their productivity ratios.
D)Productivity ratios estimate the productivity of borrowed amounts.

Question

Quizplus · Accepted Answer

The inverse of inventory turnover times 365 estimates the number of days to liquidate inventory. Option A is incorrect because fixed asset turnover represents the contribution of every dollar of assets to net sales, not credit sales. Option C is incorrect because the collection period of receivables and payables can be inferred from their productivity ratios. Option D is incorrect because productivity ratios estimate the productivity of assets, not borrowed amounts.

Which One of the Following Is TRUE