A company monitors the performance of its credit control department by calculating the receivables collection period as closing trade receivables/annual credit sales x 365. Which of the following factors could cause the receivables collection period calculated as above to be abnormally high compared to the monthly average level during the year? 1 The company’s trade is seasonal 2 A downturn in the company’s credit sales in the last few months of its accounting period. 3 A large credit sale in the final month of its accounting period
A 1 and 2 B 1 and 3 C 2 and 3 D All three factors B |