Which of the following statements is true? Assuming all else holds constant, if the average accounts receivable decreases, then the margin will increase Assuming all else holds constant, if the average accounts receivable decreases, then the margin will decrease Assuming all else holds constant

Accounting Jan 19, 2021

Which of the following statements is true? Assuming all else holds constant, if the average accounts receivable decreases, then the margin will increase Assuming all else holds constant, if the average accounts receivable decreases, then the margin will decrease Assuming all else holds constant. If the average accounts receivable decreases, then the turnover will increase Assuming all else holds constant. If the average accounts receivable decreases, then the turnover will decrease

Expert Solution

C. if all else holds constant, average accounts recevaible decrese then turnover will increase

let suppose :

Cogs= 300000

average receivables = 100000

Turnover ratio

= 3

now, if average turnover will be 90000

then turnoverr ratio will be 3.333

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