If a firm's sales and those of its customers are closely correlated with economic conditions, it is certainly possible for a firm's total investment in accounts receivable to decrease while its days sales outstanding increases.

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If economic conditions worsen, both the firm's sales and the sales of its customers may decrease. This could result in the firm collecting payments slower and the days sales outstanding increasing, even if they decrease their investment in accounts receivable.

If a Firm's Sales and Those of Its Customers Are