An increasing average collection period indicates:
A) the firm is generating more income.
B) accounts receivable is going down.
C) the company is becoming more efficient in its collection policy.
D) the company is becoming less efficient in its collection policy.

Question

Quizplus · Accepted Answer

An increasing average collection period means that the company is taking longer to collect its accounts receivable, which indicates that it is becoming less efficient in its collection policy. This can result in cash flow problems and may also suggest that customers are having difficulty paying their bills on time.

An Increasing Average Collection Period Indicates