Vidyalelo
Commerce · Q154

Financial Management

Graduate and Post Graduate · Commerce · question 154

Q154

A higher accounts receivable turnover ratio means__________.

A.
lower debt collection period
Answer
B.
higher debt collection period
C.
lower sales
D.
higher sales

Answer: Option A

Solution

Answer: Option A
Solution:
A higher accounts receivable turnover ratio mean lower debt collection period. Debtor Collection Period indicates the average time taken to collect trade debts. In other words, a reducing period of time is an indicator of increasing efficiency.