What is the most likely reason for a company to have an increase in average collection period?

Question

Quizplus · Accepted Answer

If a company has become more lenient in its credit policies and is extending credit terms, it is likely that customers are taking longer to pay their bills, causing an increase in the average collection period. Option A is unlikely to cause an increase in the average collection period because it is related to marketing expenses, not the payment habits of customers. Option B is incorrect because if customers are paying in a timelier manner, the average collection period would decrease. Option C is also incorrect because if the company has tightened its credit policies, it would expect customers to pay more promptly, thereby reducing the average collection period.

What Is the Most Likely Reason for a Company to Have