In Scenario 8-2 Above,after Analyzing the Average Collection Period Ratio,you

question 114

Multiple Choice

In Scenario 8-2 above,after analyzing the average collection period ratio,you concluded that

• A) Denny has a problem since his number is so low.
• B) Denny may have overly restrictive credit policies.
• C) Denny has many uncollected accounts receivable.
• D) Denny's cash flow will soon be affected since his accounts receivables are not being paid.

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Definitions:

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs of goods sold or raw material expenses.

Break-Even Revenue

The amount of income needed to cover all operating expenses, with no profit or loss.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent or salaries.

Variable Cost

Costs that change in proportion to the good or service that a business produces.