Firms following a restricted current asset investment policy:

Question

Quizplus · Accepted Answer

Firms following a restricted current asset investment policy typically have relatively low levels of accounts receivable, as they focus on collecting cash quickly and minimizing credit sales. This helps to reduce the risk of default and improve cash flow, but may also limit sales growth and potentially result in a lower return on investment. The cash conversion cycle may be shorter in these firms since they are collecting cash quickly, but their inventory conversion may not necessarily be the highest in the industry.

Firms Following a Restricted Current Asset Investment Policy