An increase in the firm’s receivable turnover ratio means that:
- The firm is collecting credit more quickly than earlier
- Cash sales have decreased
- The firm has initiated more liberal credit terms
- Inventories have increased
|
Item |
2001 |
2002 |
|
Sales |
$200,000 |
$180,000 |
|
Cost of good sold |
$100,000 |
$80,000 |
|
Net income |
$40,000 |
$36,000 |
|
Accounts receivable (Dec. 31) |
$16,000 |
$8,000 |
|
Inventory (Dec. 31) |
$20,000 |
$40,000 |