If trade receivables are collected quickly, it may indicate which of the following?
A) The trade receivables turnover is low.
B) The company's credit policies may be overly stringent.
C) Credit is often granted to poor credit risks.
D) The company is becoming more proﬁtable.

Question

Quizplus · Accepted Answer

When trade receivables are collected quickly, it may indicate that the company's credit policies are overly stringent, meaning they are strict about who they extend credit to and how quickly they expect repayment. This can lead to faster collection times but might also limit sales if potential customers are deterred by the strict credit terms.

If Trade Receivables Are Collected Quickly, It May Indicate Which