If a firm increases its cash discount period, the firm's investment in accounts receivable due to discount takers still getting cash discounts but paying later is expected to increase.

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When a firm extends its cash discount period, customers have a longer timeframe to pay their invoices and still receive a discount. This extension encourages customers to delay payments within the new extended period, thereby increasing the firm's investment in accounts receivable as funds are tied up for a longer duration.

If a Firm Increases Its Cash Discount Period, the Firm's