Accounting 26th Edition by Carl Warren,James Reeve,Jonathan Duchac

Exercise 50

Accounts receivable turnover
The accounts receivable turnover ratio will vary across companies, depending on the nature of the company's operations. For example, an accounts receivable turnover of 6 for a retailer is unacceptable but might be excellent for a manufacturer of specialty milling equipment. A list of well-known companies follows:

1. Categorize each of the preceding companies as to whether its turnover ratio is likely to be above or below 15.
2. Based on (1), identify a characteristic of companies with accounts receivable turnover ratios above 15.