The ________ ratio may indicate poor collections procedures or a relaxed credit policy.
A) average payment period
B) inventory turnover
C) average collection period
D) quick

Question

Quizplus · Accepted Answer

The average collection period measures the average number of days it takes for a company to collect its accounts receivable. A high average collection period may indicate that a company is not collecting its accounts receivable in a timely manner, which could be due to poor collections procedures or a relaxed credit policy. Therefore, option C is the correct answer. Options A, B, and D do not provide information about collections procedures or credit policy.

The ________ Ratio May Indicate Poor Collections Procedures or a Relaxed