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      Question

      ABC Company extends credit terms of 45 days to its

      customers. Its credit collection would be considered poor if its average collection period was
      A 30 days Correct Answer Incorrect Answer
      B 36 days Correct Answer Incorrect Answer
      C 40 days Correct Answer Incorrect Answer
      D 25 days Correct Answer Incorrect Answer
      E 57 days Correct Answer Incorrect Answer

      Solution

      ABC Company extends credit terms of 45 days to its customers. The average collection period refers to the average number of days it takes for ABC Company to collect payments from its customers. In this case, if the average collection period is longer than the credit terms (45 days), it indicates poor credit collection. Among the given options, option e. 57 days represents a longer average collection period than the credit terms, indicating poor credit collection. Therefore, the correct answer is e. 57 days.

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