Which of the following statements about the interpretation of the receivables turnover ratio is not correct?
A)Analysts often interpret a sudden increase in the receivables turnover ratio as a signal of a developing problem.
B)The smaller the receivables turnover ratio the larger the days to collect.
C)A change in the receivables turnover ratio may indicate a change in the company's credit granting policies.
D)A change in the receivables turnover ratio may indicate a change in economic conditions.

Question

Quizplus · Accepted Answer

Analysts watch for changes in the receivables turnover ratio because a sudden decline (rather than a sudden increase)may mean that a company is recording sales of merchandise that customers are likely to return later.

Which of the Following Statements About the Interpretation of the Receivables