Which of the Following Statements Is CORRECT

question 1

Multiple Choice

Which of the following statements is CORRECT?

• A) If a security analyst saw that a firm's days' sales outstanding (DSO) was higher than the industry average and was also increasing and trending still higher, this would be interpreted as a sign of
• Strength.
• B) If a firm increases its sales while holding its accounts receivable constant, then, other things held constant, its days' sales
• Outstanding (DSO) will increase.
• C) There is no relationship between the days' sales outstanding (DSO) and the average collection period (ACP). These ratios measure
• Entirely different things.
• D) A reduction in accounts receivable would have no effect on the
• Current ratio, but it would lead to an increase in the quick ratio.
• E) If a firm increases its sales while holding its accounts receivable constant, then, other things held constant, its days' sales outstanding will decline.

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Definitions:

Localization

The process of adapting certain functions to accommodate the language, culture, or governing laws of a country.

Governing Laws

A set of legal rules that regulate behavior and ensure order within a society or specific areas of activity.

Adapting

The process of changing or adjusting in response to new conditions or environments.

Honeymoon Stage

A period at the beginning of a new job, project, or relationship where everything seems positive and any difficulties or challenges are minimized.