Customer concentration can be an important consideration in the quality of receivables.

Question

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Customer concentration refers to the degree to which a company's sales are made to a few key customers. If a significant portion of a company's sales come from a small number of customers, this can increase the credit risk associated with those sales. If the company loses one or more of these customers or if they experience financial difficulties, it can have a significant impact on the company's ability to collect its receivables. Therefore, customer concentration is an important consideration in the quality of receivables.

Customer Concentration Can Be an Important Consideration in the Quality