Which of the following is an indication that a company may be recognizing revenue prematurely? Relative to its competitors, the company's:
A. total asset turnover is decreasing
B. receivables turnover is increasing
C. Days of sales outstanding is increasing.
The answer was C. I got confused. What is it not B? If revenue is recognized prematurely, then it's higher. So if it's higher, total asset turnover should be higher, so A is wrong. But B appears to be right. DSO = 365 * (avg receivables/annual sales), if revenue is higher, shouldn't DSO become lower?