Which of the Following Statements Is FALSE

question 41

Multiple Choice

Which of the following statements is FALSE?

• A)Because accounts receivable days can be calculated from the firm's financial statement, outside investors commonly use this measure to evaluate a firm's credit management policy.
• B)Seasonal sales patterns may cause the number calculated for the accounts receivable days to change depending on when the calculation takes place.
• C)The ageing schedule is also sometimes augmented by analysis of the payments pattern, which provides information on the percentage of monthly sales that the firm collects in each month after the sale.
• D)If the ageing schedule gets 'top-heavy'-that is, if the percentages in the upper half of the schedule begin to increase-the firm will likely need to revisit its credit policy.

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Definitions:

Unlimited Demand

A market scenario where the desire for a product surpasses the available supply at any price.

Constrained Resource

A limiting factor or scarce resource in a production process that restricts the company's ability to meet demand.

Current Profitability

A measure of the current efficiency and performance of a business in generating profit, often assessed over a short-term period.

Constrained Resource

Refers to a limited factor that restricts a company's ability to produce goods or services, such as a machine with finite capacity or limited labor.