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The Accounts Receivable Turnover increased from 10.0 in the prior year ro 12.0 in the current...

The Accounts Receivable Turnover increased from 10.0 in the prior year ro 12.0 in the current year:

A.This is an improvement of the ratio. Accounts Receivable are being collected more slowly

B.This is a worsening of the ratio. Accounts Receivable are being collected more quickly.

C.This is a worsening of the ratio. Accounts Receivable are being collected more slowly.

D.. This is an improvement of the ratio. Accounts Receivable are being collected more quickly.

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Answer #1

Answer ) option D

This is an improvement of the ratio. Accounts Receivable are being collected more quickly.

the receivables turnover ratio indicates the efficiency with which a firm collects on the credit it issues to customers

high receivables turnover ratio can imply that the company’s collection of accounts receivable is efficient, and that the company has a high proportion of quality customers that pay off their debts quickly.
A low ratio, in a similar way, can also suggest a few things about a company, such as that the company may have poor collecting processes, a bad credit policy or none at all, or bad customers or customers with financial difficulty.
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