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Which of the given statements is right?

a. A firm which makes 90% of its sales on credit and 10% for cash is growing at a constant rate of 10% annually. Such a firm will be capable to keep its accounts receivable at the present level, as 10% cash sales can be employed to finance the 10% growth rate.

b. In managing a firm's accounts receivable, it is possible to raise credit sales per day yet still keep accounts receivable fairly steady, given the firm can shorten the length of its collection period (its DSO) adequately.

c. Since of the costs of granting credit, it is not possible for credit sales to be more profitable than cash sales.

d. As receivables and payables both outcome from sales transactions, a firm with a high receivables-to-sales ratio should as well have a high payables-to-sales ratio.

e. Other things held constant, if a firm can shorten its DSO, this will lead to a maximum current ratio.

Management Theories, Management Studies

  • Category:- Management Theories
  • Reference No.:- M915783

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