The ________ Is Useful in Evaluating Credit and Collection Policies

question 65

Multiple Choice

The ________ is useful in evaluating credit and collection policies.

• A) average payment period
• B) current ratio
• C) average collection period
• D) current asset turnover

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Definitions:

Potential Output

A measure of the highest level of economic output an economy can sustain over a period without increasing inflation; synonymous with potential GDP.

Negotiable

Referring to something that can be discussed or altered through negotiation, such as terms of a contract or a financial instrument.

Expansionary Gap

A situation where the total demand in an economy exceeds its potential output, leading to inflationary pressures.

Recessionary Gap

A situation in which the real GDP is lower than the potential GDP, leading to unemployment and underutilized resources.