A Firm Whose Days Sales Outstanding Is Much Higher Than

question 98

True/False

A firm whose days sales outstanding is much higher than the industry's average is likely to either be too "tight" in its credit policy or too "loose" in its collection policy.

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Definitions:

MACRS

Modified Accelerated Cost Recovery System; a method of depreciation for tax purposes in the United States.

Depreciated

A decrease in the value of an asset over time due to wear and tear, obsolescence, or market conditions, often used for tax purposes.

Cash Inflow

The total amount of money being transferred into a business, from operations, financing or investing activities, over a specific period of time.

Cash Flows

The cumulative sum of funds moving into and exiting a company, notably influencing its liquidity.