Final answer:
The given statement `There is no relationship between the days' sales outstanding (DSO) and the average collection period (ACP). These ratios measure entirely different things` is False.
The answer is option ⇒B. False
Step-by-step explanation:
False. The days' sales outstanding (DSO) and average collection period (ACP) are related concepts that measure different aspects of a company's accounts receivable management.
The DSO measures the average number of days it takes for a company to collect payment from its customers. It is calculated by dividing accounts receivable by the average daily sales. A higher DSO indicates that it takes longer for the company to collect payment, which could be a sign of potential issues with cash flow or credit management.
On the other hand, the ACP measures the average number of days it takes for a company to collect payment from its customers, expressed in terms of sales (rather than accounts receivable). A higher ACP indicates that it takes longer for the company to collect payment relative to its sales volume.
The answer is option ⇒B. False