Low average collection periods usually indicate many uncollectible receivables, while high average collection periods may indicate overly restrictive credit-granting policies.

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Low average collection periods indicate that a company is collecting its receivables quickly, suggesting efficient credit and collection processes, not uncollectible receivables. High average collection periods may indicate that a company is slow in collecting its receivables, which could be due to lenient credit policies or inefficient collection processes, not necessarily overly restrictive credit-granting policies.

Low Average Collection Periods Usually Indicate Many Uncollectible Receivables, While