When a firm improves (lowers)its average collection period, it generally
A)requires additional cash investment in inventory.
B)releases cash locked up in accounts receivable.
C)does not alter its cash position.
D)cannot reduce its receivables.

Question

Quizplus · Accepted Answer

Improving the average collection period means that the firm is able to collect its accounts receivable more quickly. This leads to a release of cash that was previously locked up in these receivables, improving the firm's cash position.

When a Firm Improves (Lowers)its Average Collection Period, It Generally