Question - Mark's Wine and Spirits is the wholesale supplier of wine and liquor to local package stores. Most of Mark's sales are on credit with terms of 1/10, n/45. The accounts receivable turnover ratio has declined from 11.3 in 2003 to 8.3 in 2004. Mark is concerned about the decline and is unsure of what steps he should take to improve the ratio.
1. List three potential reasons for such a significant decline.
2. What are three things Mark should consider doing to improve the ratio?
3. How is the accounts receivable turnover ratio used and what does it measure?