Question
a. Use the following simplified 2017 balance sheet to show, in general terms, how an improvement in the DSO would tend to affect the stock
a. Use the following simplified 2017 balance sheet to show, in general terms, how an improvement in the DSO would tend to affect the stock price. For example; if the company could improve its collection procedures and thereby lower its DSO from 45.6 days to the 32-day industry average without affecting sales, how would that change ripple through the financial statements (shown in thousands below) and influence the stock price?
Accounts receivable | $878 | Current liabilities | $845 |
Other current assets | 1,802 | Debt | 700 |
Net fixed assets | 817 | Equity | 1,952 |
Total assets | $3,497 | Liabilities plus equity | $3,497 |
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