Can a company have a default rate on its accounts receivable, Financial Management

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Can a company have a default rate on its accounts receivable that is too low? Explain.

A company could comprise a default rate on AR that would be referred too low if by liberalizing credit terms a important increase in sales revenue and cash inflows were to result. If the increase in the default rate is much more as compared to offset by the increase in sales revenue, after all incremental cash flows are considered a positive NPV could result.

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