Which of the Following Statements Is CORRECT

question 30

Multiple Choice

Which of the following statements is CORRECT?

• A) In managing a firm's accounts receivable, it is possible to increase credit sales per day yet still keep accounts receivable fairly steady, provided the firm can shorten the length of its collection period (its DSO) sufficiently.
• B) Because of the costs of granting credit, it is not possible for credit sales to be more profitable than cash sales.
• C) Since receivables and payables both result from sales transactions, a firm with a high receivables-to-sales ratio must also have a high payables-to-sales ratio.
• D) Other things held constant, if a firm can shorten its DSO, this will lead to a higher current ratio.
• E) A firm that makes 90% of its sales on credit and 10% for cash is growing at a constant rate of 10% annually.Such a firm will be able to keep its accounts receivable at the current level, since the 10% cash sales can be used to finance the 10% growth rate.

---

Definitions:

Native American Rights Fund

A legal organization established in 1970 to defend and advance the rights of Native American tribes, communities, and individuals.

Tribal Ownership

The collective ownership of land, resources, or entities by indigenous tribes or groups, often governed by tribal laws and customs.

National Congress

A formal gathering or assembly at the national level, typically of representatives or delegates, involved in discussing and making decisions on matters of national importance.

Henry Kissinger

A German-born American diplomat and political scientist who served as National Security Advisor and later Secretary of State under Presidents Nixon and Ford, known for his role in shaping U.S. foreign policy, particularly in relation to Vietnam and the Soviet Union.