Which of the following would not change the receivables turnover ratio for a retail company?

QUESTION

Which of the following would not change the receivables turnover ratio for a retail company?
a. Increases in the retail prices of inventory.
b. A change in credit policy.
c. Increases in the cost incurred to purchase inventory.
d. None of the above.
c. Increases in the cost incurred to purchase inventory Increase in the cost incurred to purchase inventory will not change the receivables turnover ratio. This is because the receivables turnover ratio is calculated by dividing the sales with the accounts receivables. The purchase of inventory will effect neither of the two

nents of the receivables turnover ratio. On the other hand the increase in the retail prices of the inventory and the change in credit policy will effect the amount of sales and receivables and will thus change the ratio.

ANSWER:

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