a zero-growth firm, it is possible to increase the percentage of sales that are made on credit and still keep accounts receivable at their current level, provided the firm can shorten the length of its collection period sufficiently.

Question

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If the firm can shorten the length of its collection period, it will be able to receive payments from credit sales faster, which will allow it to maintain its current level of accounts receivable even if it increases the percentage of sales made on credit. This assumes no other changes or factors impacting accounts receivable.

A Zero-Growth Firm, It Is Possible to Increase the Percentage