Which of the following would be most responsible for a company's average collection period being higher than the industry average?
A)If a company's growth in sales is greater than the growth of sales in the industry.
B)Being more aggressive in collecting its accounts receivable than its competitors.
C)Having credit policy standards that are more restrictive than its competitors.
D)Being more lenient in extending credit to its customers than its competitors.

Question

Quizplus · Accepted Answer

If a company is more lenient in extending credit to its customers than its competitors, it will have a higher average collection period since customers may take longer to pay. This would result in the company's average collection period being higher than the industry average. Options A and B do not necessarily explain why the company's average collection period is higher, and option C's credit policy standards being more restrictive would result in a lower average collection period.

Which of the Following Would Be Most Responsible for a Company's