If the cash discount period is increased, the firm's investment in accounts receivable due tonondiscount takers now paying earlier is expected to

Question

Quizplus · Accepted Answer

If the cash discount period is increased, non-discount takers may still pay at the same time, or even later, which would decrease the firm's investment in accounts receivable. However, if non-discount takers take advantage of the longer discount period and pay earlier, it could increase the firm's investment in accounts receivable. Overall, it is more likely for the investment in accounts receivable to decrease with an increase in the cash discount period.

If the Cash Discount Period Is Increased, the Firm's Investment