Indicate whether each of the following statements about financial statement analysis is true or false.________ a) Working capital measures a company's immediate debt-paying ability.________ b) Accounts receivable turnover is a direct measure of a company's uncollectible accounts expense.________ c) Accounts receivable turnover is calculated by using the following formula: net credit sales ÷ average accounts receivable.________ d) Net credit sales are comprised of sales on account plus sales returns and discounts.________ e) The amount of average receivables can be calculated using the amount of receivables shown on balance sheets for the current year and previous year.
What will be an ideal response?
a) T b) F c) T d) F e) T
a) Working capital measures a company's immediate debt-paying ability.
b) Accounts receivable turnover is not a direct measure of a company's uncollectible accounts expense.
c) Accounts receivable turnover is calculated by using the following formula: net credit sales ÷ average accounts receivable.
d) Net credit sales are comprised of sales on account less sales returns and discounts.
e) The amount of average receivables can be calculated using the amount of receivables shown on balance sheets for the current year and previous year.
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