Which of the following ratios would be the poorest indicator of how rapidly the firm's credit accounts are being collected?
A) times interest earned
B) average collection period
C) accounts receivable turnover ratio
D) cash conversion cycle

Question

Quizplus · Accepted Answer

The times interest earned ratio measures a firm's ability to meet its interest payments on debt obligations. It is not directly related to the collection of credit accounts, so it would be the poorest indicator in this case. The average collection period, accounts receivable turnover ratio, and cash conversion cycle all provide insights into how rapidly credit accounts are being collected.

Which of the Following Ratios Would Be the Poorest Indicator