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.
E)None of the above.

Question

Quizplus · Accepted Answer

If a company is more lenient in extending credit to its customers than its competitors, it would result in a higher average collection period as it takes longer to collect the payment from the customers. This would cause the company's average collection period to be higher than the industry average. Hence, choice D is the most responsible for a company's average collection period being higher than the industry average. The other options do not directly impact the average collection period in the same way as choice D.

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