Why Is Diversification Recommended for Investors

question 75

Essay

Why is diversification recommended for investors?

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Definitions:

Credit Sales

Sales transactions where the customer is allowed to purchase goods or services on account, paying the seller at a later date.

Cash Sales

Transactions where goods or services are paid for and received at the time of sale, using cash or equivalent forms of payment.

Accounts Receivable Turnover Ratio

A financial metric that measures how efficiently a company collects cash from its credit sales by dividing net credit sales by the average accounts receivable during a period.

Customer Payment Patterns

The tendencies or behaviors observed in how customers make their payments, which can vary in timing and method.