If Trade Receivables Are Collected Quickly, It May Indicate Which

question 138

Multiple Choice

If trade receivables are collected quickly, it may indicate which of the following?

• A) The trade receivables turnover is low.
• B) The company's credit policies may be overly stringent.
• C) Credit is often granted to poor credit risks.
• D) The company is becoming more profitable.

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Definitions:

Overhead

General business expenses not directly attributed to creating a product or service.

Incremental Revenue

The additional revenue generated from a specific action or decision, beyond what would have been generated without it.

Variable Cost

Costs that vary directly with the level of production or sales volume, such as materials and labor.

Fixed Cost

A fixed cost is an expense that does not change with the level of goods or services produced by a business, such as lease payments or insurance premiums.