An efficient firm with good working capital management should have a high average collection period compared to its industry.

Question

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An efficient firm with good working capital management should have a low average collection period compared to its industry. This means it is able to collect payments from its customers quickly and efficiently, which allows it to have more cash on hand for investing in growth opportunities or paying down debt. A high average collection period may indicate that the company is struggling to collect payments, which can have a negative impact on its cash flow and overall financial health.

An Efficient Firm with Good Working Capital Management Should Have