An Increasing Accounts Receivables Balance Is Always a Good Sign

question 47

True/False

An increasing accounts receivables balance is always a good sign as it means the company has more current assets and is more liquid.

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Definitions:

Firm Completion

A commitment to finish a project or deliver a product by a specified date.

Asymmetric Information

Assumes managers have more complete information than investors about a firm’s prospects—can have an important effect on capital structure.

Diversified Portfolios

Investment strategies involving the mixing of various asset classes and securities to reduce risk through diversification.

Financial Distress

A scenario in which a business is unable to fulfill or struggles to pay its debts to those it owes money to.