Which of the following facts might make a firm's interval measure too optimistic?
A)The cost of raw materials has been decreasing
B)The average collection period continues to increase
C)A large component of marketable securities will mature soon
D)The firm's cash is not earning any interest

Question

Quizplus · Accepted Answer

An increasing average collection period means that it is taking longer for the firm to collect its accounts receivable. This could lead to cash flow problems and make the interval measure too optimistic as it assumes a steady cash inflow.

Which of the Following Facts Might Make a Firm's Interval