Working Capital Management Questions and Answers in Quiz Form 7 for Practice

91. What is the accounts receivable turnover ratio?

1. Average accounts receivable / Net credit sales 1
2. Net credit sales / Total assets
3. Total assets / Net credit sales
4. Net credit sales / Average accounts receivable

92. What does the accounts receivable turnover ratio measure?

1. How quickly a company sells its inventory
2. How much credit a company extends to its customers
3. How much credit a company receives from its suppliers
4. How efficiently a company collects its accounts receivable

93. What is the days' sales outstanding (DSO)?

1. 365 days x Accounts receivable turnover ratio
2. Accounts receivable / Net credit sales
3. Net credit sales / Accounts receivable
4. 365 days / Accounts receivable turnover ratio

94. What does the DSO measure?

1. The average number of days it takes a company to sell its inventory
2. The average number of days it takes a company to pay its accounts payable
3. The average number of days it takes a company to produce a product
4. The average number of days it takes a company to collect its accounts receivable

95. What is the accounts payable turnover ratio?

1. Average accounts payable / Cost of goods sold 2
2. Cost of goods sold / Total liabilities
3. Total liabilities / Cost of goods sold
4. Cost of goods sold / Average accounts payable

96. What does the accounts payable turnover ratio measure?

1. How quickly a company sells its inventory
2. How much credit a company extends to its customers
3. How much credit a company receives from its suppliers
4. How efficiently a company pays its suppliers

97. What is the days' payables outstanding (DPO)?

1. 365 days x Accounts payable turnover ratio
2. Accounts payable / Cost of goods sold
3. Cost of goods sold / Accounts payable
4. 365 days / Accounts payable turnover ratio

98. What does the DPO measure?

1. The average number of days it takes a company to collect its accounts receivable
2. The average number of days it takes a company to sell its inventory
3. The average number of days it takes a company to produce a product
4. The average number of days it takes a company to pay its suppliers

99. What is the cash conversion cycle?

1. Days' sales in inventory - Days' sales outstanding + Days' payables outstanding
2. Days' sales outstanding - Days' sales in inventory + Days' payables outstanding
3. Days' payables outstanding - Days' sales in inventory - Days' sales outstanding
4. Days' sales in inventory + Days' sales outstanding - Days' payables outstanding

100. What does the cash conversion cycle measure?

1. The length of time it takes a company to pay its suppliers
2. The length of time it takes a company to collect its accounts receivable
3. The length of time it takes a company to sell its inventory
4. The length of time it takes a company to convert its investments in inventory and accounts receivable into cash