ABC Corp Extends Credit Terms of 45 Days to Its Customers

question 16

Multiple Choice

ABC Corp. extends credit terms of 45 days to its customers. Its credit collection would likely be considered poor if its average collection period was ________.

• A) 30 days
• B) 36 days
• C) 44 days
• D) 57 days

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Definitions:

Market Value

The present rate at which a service or asset is available for sale or purchase in the open market.

Liquid Market

A market with a high level of trading activity, where assets can be bought or sold quickly without causing a significant change in their price.

Investment Banks

Financial institutions that assist individuals, corporations, and governments in raising capital by underwriting and acting as the agent in the issuance of securities.

Commercial Banks

Financial institutions that provide loans, accept deposits, and offer basic financial products like savings accounts to the public.