Which of the Following Statements Is FALSE

question 22

Multiple Choice

Which of the following statements is FALSE?

• A)The aging schedule is also sometimes augmented by analysis of the payments pattern,which provides information on the percentage of monthly sales that the firm collects in each month after the sale.
• B)Because accounts receivable days can be calculated from the firm's financial statement,outside investors commonly use this measure to evaluate a firm's credit management policy.
• C)If the aging schedule gets "top-heavy"-that is,if the percentages in the upper half of the schedule begin to increase-the firm will likely need to revisit its credit policy.
• D)Seasonal sales patterns may cause the number calculated for the accounts receivable days to change depending on when the calculation takes place.

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Definitions:

Market Risk Premium

The market risk premium is the additional return an investor expects to receive from holding a risky market portfolio instead of risk-free assets.

Portfolio AB

A diversified collection of investments of varying types held by an individual or institution.

Market Risk Premium

The additional return expected by investors for accepting the higher risk associated with the equity market over a risk-free asset.

Risk-Free Rate

The risk-free rate is the theoretical rate of return of an investment with zero risk, often represented by the yield of a short-term government bond.