A decline in accounts receivable when sales are increasing is a red flag that the firm is not collecting cash from its customers.

Question

Quizplus · Accepted Answer

A decline in accounts receivable when sales are increasing could actually be a positive sign that the company is collecting cash more efficiently, for example, through faster payment terms or better credit policies. However, it is important to monitor the overall trend and compare with prior periods to identify any concerning patterns.

A Decline in Accounts Receivable When Sales Are Increasing Is