Current asset accounts, especially cash and inventory, usually increase at a rate slightly less than the growth rate in sales. Why? If true, what is the implication of this fact for the sustainable growth model?
Answer to relevant QuestionsSuppose that a firm follows the matching strategy. Does this imply that the firm’s current assets will equal its current liabilities? What is the logic of the percentage-of-sales method for constructing pro forma statements? Why should a firm actively monitor the accounts receivable of its credit customers? How does each of the following credit monitoring techniques work: (a) Average collection period, (b) Aging of accounts receivable, and (c) ...How are the five Cs of credit used to perform in-depth credit analysis? Why this framework is typically used only on high- dollar credit requests? What securities are considered the benchmark for money market financial instruments, and why? What are some of the popular non- U. S. Treasury money market instruments?
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