-In the judgment of the credit analysts of Joshua Company, what issue would be of most concern or source of optimism?
A) Both common stock and retained income decreased by the same dollar amount.
B) The current portion of long-term notes payable increased by 300 percent.
C) Cash and accounts receivable increased 53.4 percent and 70.1 percent, respectively.
D) Fixed assets decreased 22.2 percent.

Question

-In the judgment of the credit analysts of Joshua Company, what issue would be of most concern or source of optimism?
A) Both common stock and retained income decreased by the same dollar amount. 
B) The current portion of long-term notes payable increased by 300 percent. 
C) Cash and accounts receivable increased 53.4 percent and 70.1 percent, respectively. 
D) Fixed assets decreased 22.2 percent.

Quizplus · Accepted Answer

The increase in cash and accounts receivable should be investigated. These increases may indicate that credit policies have become too liberal; that there is an economic downturn causing customers to be slow in paying their invoices; or that there has been a recent large increase in sales without a proportionate increase in profits.

-In the Judgment of the Credit Analysts of Joshua Company