Chapter 8, Problem 18Q

To determine

Introduction

Incorporation H’s sales has been increased by 50%, as a result of hiring a new sales director. However, Incorporation H’s CEO notified that the average collection period of receivables also been increased from 17 days to 38 days.

Average collection period:

Average collection period indicates the number of days taken by a business, to collect its outstanding amount of accounts receivable on an average.

To describe: The cause of increase in average collection period, and its implications to management.