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Question
Which of the following statements is correct?
a. Other things held constant, the higher a firm's days sales outstanding (DSO), the better its credit department.
b. A firm will relax its credit standards only if it expects bad debts will not increase because of the change.
c. If a firm which sells on terms of "net 30" changes its policy and begins offering all customers terms of "2/10, net 30," and if no change in sales volume occurs, then the firm's DSO will probably increase.
d. If a firm sells on terms of 2/10, net 30, and its DSO is 30 days, then its aging schedule would probably show some past due accounts.
e. Statements a, b, c, and d are all false.
Answer
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