Receivables Management Quiz
Test your knowledge on credit management objectives, cash flow acceleration, credit scoring, and financial ratios in receivables management.
#1
Which of the following is a key objective of receivables management?
Maximizing sales revenue
Minimizing bad debts
Increasing production efficiency
Reducing variable costs
#2
What is the purpose of a credit policy in receivables management?
To set payment terms for customers
To determine the advertising budget
To calculate the cost of goods sold
To evaluate employee performance
#3
What is the primary purpose of a collections policy in receivables management?
To maximize sales revenue
To minimize bad debts
To reduce variable costs
To increase production efficiency
#4
What does Days Sales Outstanding (DSO) measure?
Inventory turnover rate
Efficiency of accounts payable
Efficiency of accounts receivable
Profit margin
#5
Which of the following is NOT a method to accelerate cash receipts?
Factoring
Discounting
Outsourcing
Early payment discounts
#6
What is the aging schedule in receivables management used for?
To determine the depreciation expense
To estimate the useful life of fixed assets
To classify accounts receivable by their age
To calculate the inventory turnover ratio
#7
Which of the following is a disadvantage of factoring as a method of receivables management?
High cost
Decreased liquidity
Lengthy approval process
Limited customer base
#8
Which financial ratio helps assess a company's ability to pay its short-term obligations?
Current ratio
Debt to equity ratio
Return on investment ratio
Earnings per share
#9
What is the purpose of credit scoring in receivables management?
To assess the creditworthiness of customers
To determine the pricing strategy
To evaluate the effectiveness of collection efforts
To calculate the inventory turnover ratio
#10
What is the formula to calculate the Days Sales Outstanding (DSO)?
Accounts receivable / Net sales * 365
Net sales / Accounts receivable * 365
Accounts receivable / Net sales * 30
Net sales / Accounts receivable * 30
#11
What is the primary objective of credit analysis in receivables management?
To determine the pricing strategy.
To assess the creditworthiness of customers.
To evaluate the effectiveness of collection efforts.
To calculate the inventory turnover ratio.
#12
Which of the following is a disadvantage of outsourcing collections in receivables management?
Reduced risk of bad debts.
Increased control over the collection process.
Decreased flexibility in handling customer relationships.
Lower costs associated with collection efforts.
#13
What is the formula to calculate the accounts receivable turnover ratio?
Net sales / Average accounts receivable.
Average accounts receivable / Net sales.
Net sales / Accounts receivable.
Accounts receivable / Net sales.
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