What does a high accounts receivable turnover ratio indicate?

A high accounts receivable turnover ratio indicates that the company is efficient in collecting its receivables. This ratio measures how many times a company's receivables are collected over a specific period, often a year. A higher ratio suggests that the business is able to quickly collect outstanding invoices and convert credit sales into cash, reflecting effective credit policies and strong customer payment behaviors.

When a company can turn over its receivables frequently, it demonstrates not only good collection practices but also potentially indicates that it has a solid customer base that values its products or services enough to pay on time. Furthermore, an efficient collection process can enhance the company's cash flow, allowing it to reinvest in operations or pay down debt more quickly.

The other options discuss negative aspects or challenges that would not apply in the case of a high accounts receivable turnover ratio, where efficiency and effectiveness in collections is the highlight.