Which of the Following Reasons Should Not Be Considered in Order

question 7

Multiple Choice

Which of the following reasons should not be considered in order to explain why the receivables appear to be abnormally high?

• A)Sales volume expanded materially late in the year.
• B)Receivables have collectibility problems and possibly some should have been written off.
• C)The company seasonally dates invoices.
• D)Material amount of receivables are on the installment basis.
• E)Sales volume decreases materially late in the year.

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Definitions:

Net Working Capital

The disparity between a firm's existing assets and its immediate liabilities, showing the company's short-term fiscal stability and efficiency in operations.

Bottom-Up Approach

An investment strategy that starts with the analysis of individual stocks and then proceeds to the broader economy.

Operating Cash Flow

A financial metric that represents the cash generated by a company's regular business operations in a specific time frame.

Comprehensive Income

Represents the total change in equity for a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes all non-owner changes in equity, not just the net income.