A high receivable turnover indicates that
A) many customers are defaulting on their debts.
B) a large proportion of the company's sales is on credit.
C) the company's inventory is moving very quickly.
D) customers are making payments very quickly.

Question

Quizplus · Accepted Answer

A high receivable turnover means that customers are making payments quickly, which is a positive sign for the company's cash flow and liquidity. It indicates that the company's credit policies are effective and the customers are financially stable enough to pay their debts in a timely manner. A high receivable turnover also means that the company can collect its outstanding invoices faster, reducing the risk of bad debts and improving its working capital management. Therefore, option D is the best choice.

A High Receivable Turnover Indicates That