Question
QUESTION 5 A company has the following information for 2014 and 2015: 2014 2015 Days Sales Receivable (DSR) 35 days 32 days The company also
QUESTION 5
A company has the following information for 2014 and 2015:
2014 2015
Days Sales Receivable (DSR) 35 days 32 days
The company also has credit terms for receivables of 2/10, n/30. Given this information which statement would be most accurate?
| The decrease in DSR indicates improvement in short-term solvency, but the company is still taking longer to collect receivables than what is required by their credit policy. | ||
| The decrease in DSR indicates improvement in long-term solvency or the company's ability to repay long-term debt. | ||
| The decrease in DSR indicates a decline in the company's short-term solvency, but they are still collecting faster than the credit policy terms. | ||
| The change in DSR indicates profitability for this company. |
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Principles Of Auditing: An International Perspective
Authors: Rick Stephan Hayes, Philip Wallage, Arnold Schilder, Roger Dassen
1st Edition
0077095324, 978-0077095321
