If a company's collection period for accounts receivable is considered to be excessively long, then
A)the company may want to invest excess cash from receivable collections in the stock market.
B)the company might examine its billing procedures in order to expedite collection from customers.
C)customer returns should be disallowed in order to increase the collection of cash.
D)cash flows from operations will probably be more than sufficient.

Question

Quizplus · Accepted Answer

If a company's collection period for accounts receivable is excessively long, it means that the time between the sale of a product or service and the collection of the payment for it is longer than it should be. This can result in a lack of available cash in the short term, which can have a negative impact on the company's operations. Therefore, the company might examine its billing procedures to see if there are any areas in which the process can be streamlined to expedite the collection of payments from customers. This could help to reduce the collection period and improve the company's cash flow situation.

If a Company's Collection Period for Accounts Receivable Is Considered