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High Inc. has an accounts receivable turnover ratio of 7.3. Low Company has an accounts receivable...

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Question

Finance

High Inc. has an accounts receivable turnover ratio of 7.3. LowCompany has an accounts receivable turnover ratio of 5. Assumingthat High and Low have the same sales? level, which of thefollowing statements is? correct?

A.

Low Company has? (on average) a lower accounts receivablebalance than does High.

B.

?Low's average collection period is less than? High's.

C.

?High's average collection period is less than? Low's.

D.

High has a higher accounts receivable balance on average thandoes Low Company.

Answer & Explanation Solved by verified expert
4.2 Ratings (711 Votes)
Option C is correct First we will check the accounts receivable turnover ratio of both companies as below Accounts receivable turnover ratio is given by Accounts receivable    See Answer
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