header bg

Scan QR code or get instant email to install app


Which of the following would most likely indicate deterioration of a firm’s working capital management?

A An increase in days of receivables outstanding.

An increase in days of receivables outstanding, other things equal, will lengthen both the operating and cash conversion cycles, indicating poorer working capital management. An increase in days of payables outstanding, other things equal, would decrease the cash conversion cycle. A decrease in cash and marketable securities could simply indicate better management of cash (e.g., buying back its common stock or investing excess cash in profitable business opportunities or securities).


Leave a Reply

Your email address will not be published.