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Basic Question 4 of 8
True or False?
If a firm offers its credit customers terms of 2/10, n/30 and its accounts receivable turnover rate is 5.0 times, it is managing its accounts receivables well.
User Contributed Comments 5
| User | Comment |
|---|---|
| Alastair | can someone clarify what 2/10, n30 signifies? |
| Tomm | 2% discount if paid in 10 days. If not then payment due in 30 days. |
| haarlemmer | Thanks Tomm |
| todolist | Payments are due within 30 days, however it takes 73 days to collect recevables, therefore not managing efficiently. |
| mhanazi123 | Tomm your explanasion has helped me as well.thanks. |
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Learning Outcome Statements
calculate and interpret activity, liquidity, solvency, and profitability ratios
describe relationships among ratios and evaluate a company using ratio analysis
CFA® 2024 Level I Curriculum, Volume 3, Module 11.