High Inc. has an accounts receivable turnover ratio of 7.3. Low Company has an accounts
receivable turnover ratio of 5. Assuming that High and Low have the same sales level, which of the
following statements is correct?
A) Low Company has (on average) a lower accounts receivable balance than does High.
B) High has a higher accounts receivable balance on average than does Low Company.
C) High’s average collection period is less than Low’s.
D) Low’s average collection period is less than High’s.
ANSWER
C
Place an order in 3 easy steps. Takes less than 5 mins.