If a Firm's Average Collection Period Is 42 Days, and This

question 113

Essay

If a firm's average collection period is 42 days, and this compares favourably to the industry average, what questions may you want to ask before assuming that the firm is "efficient?"

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Definitions:

Major Expenditures

Large amounts of money spent on significant aspects of business operations, such as purchasing assets, research and development, or significant repairs.

Custody

The protective care or guardianship of someone or something, often used in the context of the legal guardianship of a child or the care of assets.

Records Keeping

The practice of maintaining and organizing records and documents, often for compliance and operational purposes.

Cash Drawer

A container or compartment within a cash register where cash from transactions is kept, often used in retail settings.