If a Company's Average Collection Period Is Higher Than the Industry

question 73

Multiple Choice

If a company's average collection period is higher than the industry average, then the company might be [blank].

• A)enforcing credit conditions upon its customers which are too stringent
• B)allowing its customers too much time to pay their bills
• C)too tough in collecting its accounts
• D)too liquid

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Definitions:

Net Asset Value

The value per share of a mutual fund or an ETF, calculated by dividing the total value of all the securities in the portfolio, minus any liabilities, by the number of shares outstanding.

Diversification

An investment strategy that involves spreading out investments across various assets to reduce risk.

Investment Styles

Various approaches or strategies investors implement to allocate assets across different sectors or securities.

"Passed Through"

A process in which financial benefits or obligations are transferred from one party to another, often used in the context of mortgage-backed securities.