What does a healthy cash comparison suggest regarding accounts receivable (A/R)?

A healthy cash comparison indicating an increase in cash suggests that accounts receivable (A/R) are being effectively managed, specifically through timely payments from customers. When customers pay off their debts, this leads to an increase in cash flow for the business. This is a positive sign, reflecting that the business is converting its accounts receivable into cash, which is crucial for maintaining liquidity and supporting ongoing operations or further investments.

This situation implies that the company's credit policies and collections processes are working well, resulting in efficient turnover of receivables. It enhances the cash position of the business, allowing it to meet its short-term obligations and potentially invest back into the business for growth.

Looking at other options, an increase in sales does not automatically mean a reduction in cash; it can also lead to an increase in A/R if sales are on credit. Stable cash flow due to constant customer behavior might not reflect the dynamics involved in A/R management; it is not always indicative of healthy accounts receivable practices. Lastly, manual registrations of all customer transactions describe the process rather than the impact on cash flow from A/R, which is not directly related to the health of cash comparisons concerning A/R.