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Question
What does too low ‘Trade Receivables Turnover Ratio’ indicate?
Short Answer
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Solution
Too low trade receivables. The turnover ratio shows that the company is taking longer to collect payments from its clients. This indicates inefficiencies in credit administration, potential problems with the collection process, or that consumers are not paying on time. A low percentage may cause cash flow issues and indicate the need for stricter credit standards or improved receivables management.
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