Company a Has a Higher Days Sales Outstanding Ratio Than

question 146

Multiple Choice

Company A has a higher days sales outstanding ratio than Company B.Therefore

• A)Company A sells more on credit than Company B.
• B)Company A has a higher percentage of cash to credit sales than Company B.
• C)Company A must be collecting its accounts receivable faster than Company B,on average.
• D)Other things being equal,Company B has a cash flow advantage over Company A.

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Definitions:

Variable Costs

Expenses that vary directly with the level of production or output, including costs such as raw materials and labor directly involved in manufacturing.

Price Changes

Alterations in the cost of goods or services over time, which can be influenced by factors such as supply and demand.

Agricultural Act

Legislation that regulates agricultural production, marketing, and subsidies.

Crop Insurance Programs

Government or private insurance schemes that compensate farmers for losses to their crops due to natural disasters or adverse weather conditions.