Suppose That Two Firms Are Identical in All Aspects Except

question 32

Multiple Choice

Suppose that two firms are identical in all aspects except for their credit policies. The days sales outstanding (DSO) of Firm A is 20 days and the days sales outstanding (DSO) of Firm B is 30 days. Which of the following statements about the firms is correct?

• A)Firm A takes more time to collect its receivables than Firm B.
• B)Firm A has tighter credit terms than Firm B.
• C)Firm A has a weaker collection team than Firm B.
• D)Firm A provides less discount to its customers to pay its bills early than Firm B.
• E)Firm A has weaker receivables monitoring system than Firm B.

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