标题: One question about Working Capital Management [打印本页] 作者: noel 时间: 2013-5-4 15:28 标题: One question about Working Capital Management
Blodnick Corp. has found that its weighted average collection period has increased from 50 days last year to 55 days this year, and its average days of receivables this year is 48 compared to 52 last year. It is most likely that:
A. Blodhick has relaxed its credit standards this year.
B. Blodhick’s credit customers are paying more slowly this year.
C. Credit sales are a great part of Blodnick’s business this year.
The answer is B. The explaination is that “Outstanding accoutns are paying more slowly because the average collection period is up. Relaxed credit standards or a great reliance onc redit sales would tend to increase average days of receivables. The decrease in days of receivables suggest neither of them is likely”.
I am just confused between the term “weighted average collection period” and “average days of receivables”. To me, the first means how long it takes Blodnick to collect money while the second means how long it takes Blodnick’s custoemrs to pay. If it takes longer for the company to collet money and shorter for its customers to pay, why is the correct answer B^
