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

Question

Quizplus · Accepted Answer

A higher average collection period means the company is taking longer to collect payments from customers. This implies that the company is giving its customers too much time to pay their bills, which could potentially lead to a cash flow problem.

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