For 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

Quizplus · Accepted Answer

If a firm shortens its collection period, it can collect payments faster and keep accounts receivable at the same level even if it increases the percentage of sales made on credit. This can be achieved by offering incentives for early payment, setting shorter payment terms, utilizing electronic payment methods, and improving the creditworthiness of its customers.

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