Question

Companies A and B both report net income growth of 12% per year. Company A has a receivables turnover ratio of 5.6, which is lower last year. Company B has a receivables turnover ratio of 11.3, which is higher than last year. All other things being equal:

A) Company A is more effectively managing its receivables.

B) Company B is more effectively managing its receivables.

C) Company As days to collect is lower than Company Bs in both years.

D) Company B's days to collect increased.

Answer

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