ExpertCPA · Question 03 · Area I: Business Analysis
An analyst is reviewing a company's quarterly revenue data using a visualization tool. The trend line shows consistent 5% growth quarter-over-quarter for the last three years. However, in Q4 of the current year, there is a significant spike in revenue (20% growth) while cash collections for the same period remained flat compared to Q3. Accounts Receivable Days Sales Outstanding (DSO) jumped from 45 days to 75 days. Which of the following is the MOST LIKELY explanation for this anomaly requiring investigation?
An analyst is reviewing a company's quarterly revenue data using a visualization tool. The trend line shows consistent 5% growth quarter-over-quarter for the last three years. However, in Q4 of the current year, there is a significant spike in revenue (20% growth) while cash collections for the same period remained flat compared to Q3. Accounts Receivable Days Sales Outstanding (DSO) jumped from 45 days to 75 days. Which of the following is the MOST LIKELY explanation for this anomaly requiring investigation?
Answer options:
The company successfully launched a new product line with shorter payment terms.
The company experienced a seasonal increase in cash sales.
The company may be engaging in channel stuffing or recognizing revenue prematurely.
The company wrote off a significant amount of bad debt in Q4.
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