Over a recent three year period Vino Veritas statements of cash
Over a recent three-year period, Vino Veritas’ statements of cash flows revealed cumulative increases in the company’s accounts receivable of $145 million.
Required:
(a) How does an increase in accounts receivable affect a company’s net cash flow from operating activities?
(b) If a company’s accounts receivable balance is continually increasing from one year to the next, does that indicate, necessarily, that the firm is doing a poor job of ‘‘managing’’ or collecting its accounts receivable? Explain.
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