Which of the Following Statements Is Correct

question 65

Multiple Choice

Which of the following statements is correct?

• A) A firm that makes 90 percent of its sales on credit and 10 percent for cash is growing at a rate of 10 percent annually.If the firm maintains stable growth it will also be able to maintain its accounts receivable at its current level,since the 10 percent cash sales can be used to manage the 10 percent growth rate.
• B) In managing a firm's accounts receivable it is possible to increase credit sales per day yet still keep accounts receivable fairly steady if the firm can shorten the length of its collection period.
• C) If a firm has a large percentage of accounts over 30 days old,it is a sign that the firm's receivables management needs to be reviewed and improved.
• D) Because receivables and payables both result from sales transactions,a firm with a high receivables-to-sales ratio should also have a high payables-to-sales ratio.

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Definitions:

Illusion of Control

The illusion of control is a cognitive bias where individuals overestimate their ability to influence events and outcomes that are largely beyond their control.

Normal Curve

A symmetrical, bell-shaped curve that represents the distribution of many types of data where most occurrences take place around the average value.

Statistical Significance

A statistical statement of how likely it is that an obtained result occurred by chance.

Scatterplot

A type of graph used in statistics to visually display the relationship between two quantitative variables by plotting their data points on a two-dimensional axis.