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:

Hardness

A measure of the resistance of a material to being scratched or indented.

States Visited

The number or list of US states that an individual has traveled to at any point in time.

Sales

The transactions or processes involved in the selling of goods or services in exchange for money or other compensation.

Customers

individuals or entities that purchase goods or services from a business.