An increase in the average collection period may suggest all of the following except
A)easing of credit terms
B)customers are not paying their bills on time
C)sales have decreased
D)firm could have a liquidity problem in the future

Question

Quizplus · Accepted Answer

An increase in the average collection period means that customers are taking longer to pay their bills, which could be due to a variety of reasons such as financial difficulties, changes in payment terms, etc. However, it does not necessarily suggest that the firm has eased credit terms or will face a liquidity problem in the future. It is also possible that sales have remained stable or even increased, but customers are still taking longer to pay.

An Increase in the Average Collection Period May Suggest All