If You Were Given the Average Collection Period of a Firm

question 34

Multiple Choice

If you were given the average collection period of a firm was currently 45 days, that the average collection of the firm for the past 3 years was 30 days and that the average collection period of the firm's industry for the past few years and currently was 30 days, would you want to know any other information to evaluate the effectiveness of the firm's credit and collection policies?

• A) No, the firm obviously has a problem with its credit and collection policies.
• B) Yes, you would also want to know what the firm's credit terms are and especially if they had recently changed from 30 to 45 days.
• C) No, the firm does not seem to have any issues with its credit and collection policies.
• D) Yes, you would want to know what the average collection period was for the past few years and currently of the market in general.

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Definitions:

Radially Symmetrical

An organism is described as radially symmetrical when its body structure can be sliced into symmetrical halves through any number of planes along its center.

Water Vascular System

Unique hydraulic system of echinoderms; functions in locomotion and feeding.

Echinoderms

A phylum of marine animals including starfish, sea urchins, and sea cucumbers, characterized by radial symmetry and a water vascular system.

Digestive System

A collection of organs that breaks down food into nutrients, which the body uses for energy, growth, and cell repair.