Countryside Corporation's receivables turnover ratio decreased from 14.1 last year to 11.8 this year.Which of the following statements is correct?

Question

Quizplus · Accepted Answer

A decrease in the receivables turnover ratio indicates that the company is taking longer to collect credit payments, meaning that it is taking more time for customers to pay their debts, potentially leading to cash flow issues. Therefore, this statement is correct. B is incorrect because a lower turnover ratio does not necessarily equate to declining credit costs. C is also incorrect as a lower receivables turnover ratio may indicate inefficiency in collection methods, not efficiency. D is unrelated to the receivables turnover ratio.

Countryside Corporation's Receivables Turnover Ratio Decreased from 14