When comparing one company to another, what kind of information does the accounts receivable turnover provide?
A) How effective each company is at collecting cash from its credit customers
B) How well each company manages the financing of its assets
C) How profitable each company is based on the sale of its products
D) How much profit is generated by a share of stock of each company

Question

Quizplus · Accepted Answer

The accounts receivable turnover ratio is a liquidity ratio that measures how well a company is collecting cash from its credit customers. It indicates the number of times per year that a company converts its accounts receivable into cash. Therefore, comparing the accounts receivable turnover ratio of two companies provides information about the effectiveness of each company in collecting cash from its credit customers.

When Comparing One Company to Another, What Kind of Information