Friday, February 12, 2010

The question is false what makes it right? accounting question only 1?

receivables turnover, inventory turnover, and asset turnover are all common measures of liquidity.The question is false what makes it right? accounting question only 1?
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receivables turnover, inventory turnover, and CURRENT asset turnover are all common measures of liquidity.The question is false what makes it right? accounting question only 1?
If you give some thought it would seem self evident. First receivables is a measure of short cash flow, inventory turnover is the rate in which your inventory sells. Both are short term assets and measures of how liquid the business is in its operations. Asset turn on the other hand is by definition is a long term measure. Assets are usually composed of property, plant and equipment. These items are needed for the production process and are not ordinarily liquidated unless the business is liquidating and therefore not a measure of liquidity.
You don't generally turn over ALL assets... fixed assets like property, plant, and equipment aren't very liquid since they'd take more time to sell.

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