A Firm Takes Actions That Reduce Its Days Sales Outstanding

question 72

True/False

a firm takes actions that reduce its days sales outstanding (DSO), then, other things held constant, this will lengthen its cash conversion cycle (CCC).

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Definitions:

Borrow

The act of receiving funds from another party under the agreement to return the principal amount along with interest.

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, used to manage liquidity and ensure financial stability.

Capital Expenditures Budget

A budget allocated for long-term investments, such as buying new machinery, buildings, or technology, that will be used over time.

Budgeted Income Statement

A financial statement that estimates a company's revenue, expenses, and net income for a future period based on planned operations and strategies.