![]() When analyzing financial ratios of several different but similar companies, a company can better understand whether it is an industry-leader or whether it is falling behind. ![]() How it is performing compared to its competitors.When analyzing financial ratios of a single company over time, that company can better understand the trajectory of its accounts receivable turnover. Slower turnover of receivables may eventually lead to clients becoming insolvent and unable to pay. If a company's accounts receivable turnover ratio is low, this may be an indicator that a company is not reviewing the creditworthiness of its clients enough. Accounts receivable ratio 400,000 / 35,000 11.43. How sufficiently a company is evaluating the credit of clients. ![]() A company can project what cash it will have on hand in the future when better understanding how quickly it will convert receivable balances to cash.
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