Discussion 1 : Collection of Cash

Companies monitor factors such as days sales outstanding (DSO) and inventory levels to assess its ability to collect cash quickly from a potential customer. In your post,

• Discuss the financial ratios a firm can use to measure the time it will take to collect cash from a potential customer on average.
• Show how the ratios are computed, and explain how each works.
• Elaborate on why this is important to a business.

Discussion 2: Account Receivable

Why would a company be willing to sell its accounts receivable at a discounted amount (i.e., the amount received from the buyer is less than the recorded amount)? Give at least three reasons and explain why.