If the average collection period of a company is higher than the credit period extended by it, the firm…
A liquidity crunch is indicated when customers take longer to pay than the credit period allowed. Cash remains tied up in receivables beyond the planned period, putting…
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If the average collection period of a company is higher than the credit period extended by it, the firm is supposed to have a
Answer and explanation
Correct answer B
A liquidity crunch is indicated when customers take longer to pay than the credit period allowed. Cash remains tied up in receivables beyond the planned period, putting pressure on the firm's ability to meet payments.
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Tamil Nadu SET (TNSET)