Efficiency ratios - short answer questions
Explain why the 'cost of sales' is used to determine stock turnover.
Describe why a high stock turnover is considered to be a good thing.
Define the term 'bad debt'. Explain how the recognition of bad debts will affect the debtors days ratio for a firm.
Explain why a high debtor days' ratio figure is considered a bad thing for a company.
'Ratios are symptoms of a situation'. Discuss.