Unformatted text preview: sales, but so does the firm's credit policy. The days sales outstanding depends mainly on credit policy, although poor economic conditions can lead to a reduction in customers' ability to make payments. 2. For a given level of receivables, the lower the profit margin, the higher the cost of carrying receivables , because the greater the portion of each sales dollar that must actually be financed. Similarly, the higher the cost of the financing, the higher the dollar cost of carrying the receivables....
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- Spring '08