A company has a credit policy of 2/10, n/30. If the calculated Days Sales Receivable ratio was 22 days in the prior year and is now 28 days, what statement would be most accurate?
The company may have an issue with short-term solvency based on their ratio calculation
The company's collection time has improved from the prior year, but is still above the stated collection policy.
The company's collection time has declined from the prior year, but is still below the stated collection policy.
The company's short-term solvency appears to have improved from the previous year.