Which of the following would not directly change the receivables turnover ratio for a company? a. Selling
Question:
Which of the following would not directly change the receivables turnover ratio for a company?
a. Selling your inventory on credit at higher prices.
b. A change in your credit policy.
c. Increases in the cost you incur to purchase inventory.
d. All of the above would directly change the receivables turnover ratio.
Step by Step Answer:
The correct answer is d All of the above would directly change the receivables turnover ratio The re...View the full answer
Fundamentals Of Financial Accounting
ISBN: 9781265440169
7th Edition
Authors: Fred Phillips, Shana Clor Proell, Robert Libby, Patricia Libby
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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