If you were a loan officer evaluating a small business credit application for a loan secured by working capital,you would generally want to see a higher (rather than lower)number of days in inventory and number of days' sales in receivables.

Question

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A higher number of days in inventory and number of days' sales in receivables would indicate that the small business is taking longer to sell their products and collect payment from customers, which could potentially be a red flag for the loan officer. A lower number of days in inventory and receivables would indicate a faster turnover and better cash flow management.

If You Were a Loan Officer Evaluating a Small Business