Register now or log in to join your professional community.
The question is not fit for all types of business. It differ from business to business nature. In some type of business cash is preferred to make cash circle for to sustain in business activities. While the same group don't apply this formula in other business just for to in touch with the market with giving some relaxation to the parties. So In short this question have different aspects in different nature of business. Although no Accounting Principle nor only one formula can be apply here.
Increase in accounts receivable of course tells upon the financial health of company and reduces working capital reserved and may result into reducing business activities eventually it might adversely impact the profit of the company
