Asked by Kanisha Branner on Jul 03, 2024

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If a firm takes actions that reduce its DSO,then,other things held constant,this will lengthen its CCC.

DSO

Days Sales Outstanding (DSO) is a financial metric that calculates the average time in days that a company takes to collect payment after a sale has been made, indicating the efficiency of the company's credit and collections policies.

CCC

Cash Conversion Cycle, a metric that shows the time span between a company's outlay of cash for materials and receiving payment from the sale of goods.

  • Understand the influence of cash management strategies on the Cash Conversion Cycle (CCC).
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ZK
Zybrea KnightJul 06, 2024
Final Answer :
False
Explanation :
A reduction in DSO (days sales outstanding) means that a firm is collecting its accounts receivables faster, which leads to a decrease in the cash conversion cycle (CCC) since it can convert its sales into cash quicker. Therefore, if DSO is reduced, holding all other factors constant, the CCC will be shortened, not lengthened.