Reference no: EM132958044

Problem 1: Which of the following is used to evaluate a company's profitability?

a. Number of days of Sales in Inventory

b. Accounts Receivable Collection Period

c. Return on Equity

d. Current Ratio

Problem 2: If a company experiences an increase is the average accounts receivable collection period from the prior year, a possible cause for this increase is

a. There could have been an over-extension of credit

b. There could be ineffective collection procedures

c. There could be older and uncollectible amounts in the Accounts receivable

d. All of the above

Problem 3: If a company experiences an increasing number of days' sales in inventory, the following could be the reason

a. Good inventory management

b. Average amount of assets tied up in inventory is lessening

c. Inventory is becoming obsolete

d. The company is selling more inventory than in previous years