A sign that a firm is efficient is a:
A) high average collection period.
B) high day's sales in inventories.
C) low asset turnover.
D) high inventory turnover.

Question

Quizplus · Accepted Answer

A high inventory turnover indicates that the firm is efficiently managing its inventory and is able to sell its goods quickly, which is a sign of efficiency. A high average collection period (A) suggests that the firm is having difficulty collecting payments from customers, which could indicate inefficiency. A high day's sales in inventories (B) means that the firm is holding onto its inventory for a long time, which could lead to obsolescence or losses. A low asset turnover (C) means that the firm is not generating enough revenue from its assets, which could indicate underutilization or inefficiency.

A Sign That a Firm Is Efficient Is A