Question

• 14. A low receivables turnover ratio could be due to any of the following except _____
  • the company hired an outside agency to expedite the collection of accounts that have been outstanding for an extended period of time
  • the company loosened its credit terms in an effort to generate additional sales
  • the company is inefficient in collecting on its receivables
  • the company regularly makes large sales to customers with bad credit
• 15. A high inventory turnover ratio indicates all of following except _____.
  • there are no inventory shortages
  • Inventory is selling quickly
  • less cash is tied up in inventory
  • the risk is outdated inventory is lower
• 16. Partial financial information for Fleetwood Corporation is provided below. Assume all sales are on credit.

Year 2 Year 1

Accounts receivable

$150,000 $90,000

Inventory 195,000 130,000

Net sales 930,000 810,000

Cost of goods sold 520,000 480,000

Fleetwood’s Year 2 average days in inventory is:

• • 3.2 days
  • 63.8 days
  • 114.1 days
  • 136.9 days
• 17. A low current ratio indicates that a company has sufficient current assets to pay current liabilities as they become due.
  • true
  • False

Answer 1