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If a Firm Takes Actions That Reduce Its Days Sales

question 95

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


Definitions:

Market/Book Ratio

A financial metric comparing a company's market value to its book value, indicating how much investors are willing to pay above the net asset value.

Stock Price

The current price at which a particular stock is trading on the stock market.

Book Value

Book value is the value of a company or asset as recorded on the balance sheet, calculated by subtracting liabilities from assets.

Net Income

The total revenue minus total expenses of a company, representing the profit or loss over a specified period.

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