A firm whose days sales outstanding is much higher than the industry's average is likely to either be too "tight" in its credit policy or too "loose" in its collection policy.

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If a firm's days sales outstanding is much higher than the industry average, it is likely that the firm's credit policy is too loose or that its customers are struggling to pay their bills on time. This could be due to economic factors beyond the firm's control. However, a too-tight credit policy would actually result in lower days sales outstanding, as the firm would be turning away potential customers who do not meet its strict credit criteria.

A Firm Whose Days Sales Outstanding Is Much Higher Than