Accounts payable turnover for Blue Industries increased from 10 to 12 during 2018. Which of the...

Accounts payable turnover for Blue Industries increased from 10 to 12 during 2018. Which of the following statements best describes what this means?

A.The company paid its accounts payable more quickly in 2018, signaling a stronger liquidity position.

B.The company paid its accounts payable more slowly in 2018, signaling a weaker liquidity position.

C.Inventory turned over faster in 2018, meaning sales increased.

D.Not enough information is provided to form a conclusion.

Expert Solution

Dear student....Thank you for using chegg...correct answer is

A.The company paid its accounts payable more quickly in 2018, signaling a stronger liquidity position.

AP Turnover ratio = Net credit purchases/ Average Accounts payable

Higher turnover ratio means that the company is paying off suppliers at a faster rate than in previous periods. This means company is not facing any financial distress....

ekkarill92 answered 2 years ago

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