Receivables growth could exceed sales growth because the firm allows its customers more time to pay.

Question

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When a firm allows its customers more time to pay, it creates an increase in receivables, which can sometimes exceed sales growth. This occurs because sales growth is only measured by the actual amount of sales made during a particular period, while the increase in receivables is a reflection of both new sales made and the delay in receiving payment for those sales.

Receivables Growth Could Exceed Sales Growth Because the Firm Allows