If the firm's credit period is decreased, the sales volume can be expected to increase, the investment in accounts receivable can be expected to increase, and the bad debt expenses can be expected to increase.

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If the firm's credit period is decreased, customers will have to pay quicker, which may decrease the sales volume. Investment in accounts receivable may decrease since there will be less time for customers to pay. Bad debt expenses may also decrease since customers are paying quicker, reducing the risk of bad debt.

If the Firm's Credit Period Is Decreased, the Sales Volume