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:

Central Tendency

A statistical measure that identifies a single value as representative of an entire distribution of data, often the mean, median, or mode.

Standard Deviation

A statistic that indicates the dispersion or variability of a set of numerical data points around the mean.

Sample Size

The number of observations or participants included in a statistical sample.

Mean Value

The average of a set of numbers, calculated by dividing the sum of all the numbers by the count of the numbers.