Which of the following statements is correct? a. If a security saw that a firmâs daysâ sales outstanding (DSO) was higher than the industry average, and was increasing and trending still higher, this would be interpreted as a sign strength.
b. A high average DSO indicates that none of this customers are paying on time. In addition, it makes no sense to evaluate the firmâs DSO with the firm credit terms.
c. There is no relationship between the daysâ sales outstanding DSO and the average collection period ACP. These ratios measure entirely different things.
d. A reduction in accounts receivable would have no effect on the current ratio, but it would lead to an increase in the quick ratio.
e. If a firm increases its sales while holding its accounts receivable constant, then, other things held constant, its daysâ sales outstanding will decline.