单选题
According to the Management Discussion and Analysis section of Frankfurt Supply Company" s annual report, Frankfurt recently decreased the sales prices of its products in order to increase market share. In addition, Frankfurt recently lowered its requirements for credit customers and increased the credit limits of some customers. What is the most likely impact on Frankfurt" s accounts receivable turnover and inventory turnover as a result of these changes?
Accounts receivable turnover Inventory turnover
①A. Decrease Decrease
②B. Increase Increase
③C. Decrease Increase
【正确答案】
C
【答案解析】Accounts receivable turnover will likely decrease as a result of offering credit to customers with weak credit histories. Collections will likely slow down and bad debt expense will likely increase.
Inventory turnover is likely to increase as sales of Frankfurt" s products increase from more liberal credit terms and the decrease in price.