Which of the following statements is CORRECT? a. If a firm increases its sales while holding its
Question:
Which of the following statements is CORRECT?
a. | If a firm increases its sales while holding its accounts receivable constant, then, other things held constant, its days' sales outstanding will decline. | |
| b. | If a security analyst saw that a firm's days' sales outstanding (DSO) was higher than the industry average and was also increasing and trending still higher, this would be interpreted as a sign of strength. |
| c. | If a firm increases its sales while holding its accounts receivable constant, then, other things held constant, its days' sales outstanding (DSO) will increase. |
| d. | There is no relationship between the days' sales outstanding (DSO) and the average collection period (ACP). These ratios measure entirely different things. |
| e. | A reduction in accounts receivable would have no effect on the current ratio, but it would lead to an increase in the quick ratio. |