What is indicated by a low accounts receivable turnover?

A low accounts receivable turnover ratio indicates that a company is not collecting payments from its customers as quickly as it should be. This can be a sign of potential cash flow issues because slower collections mean that the company is not converting its sales into cash promptly. If customers are taking longer to pay or if there are frequent outstanding invoices, it can lead to delays in cash inflow, which is critical for meeting immediate operational expenses and obligations. Therefore, a low accounts receivable turnover serves as a warning that the company may face challenges in maintaining adequate liquidity and managing its short-term cash needs effectively.

The other options do not align with the implications of a low accounts receivable turnover ratio. Efficient collection of payments would typically reflect a high turnover, while effective inventory management or low operational costs do not directly correlate with accounts receivable performance.