Which of the Following Is Most Likely to Indicate That

question 42

Multiple Choice

Which of the following is most likely to indicate that a firm is experiencing difficulty in collecting its receivables?

• A) Its accounts receivable turnover decreases from 10 to 8.
• B) Its accounts receivable turnover increases from 8 to 10.
• C) Its average collection period decreases from 36 to 32.
• D) Its average collection period increases from 25 to 28.

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Definitions:

Bankruptcy

A condition that arises when a person commits an act of bankruptcy under the Bankruptcy and Insolvency Act.

Assignment Of Book Debts

The transfer of the right to collect debts owed to a business, typically to secure a loan or as part of a financial arrangement.

Crystallization

The process in which a solid forms, where atoms or molecules are highly structured in a pattern extending in all three spatial dimensions.

Corporate Financing

The process of providing funds for business activities, making investments, and managing financial risks.