Question

QUESTION 25

1. The top management of Everest Manufacturing wanted to know how well the company is managing its accounts receivable (AR) compared to its peers. The management gathered the following information from the aging schedule of AR:

Days Outstanding	Average Collection Period	% Weight
At most 30 days	23 days	40%
31 days to 60 days	54 days	25%
61 days to 120 days	93 days	20%
More than 120 days	168 days	15%

2. Based on their recently issued financial statements, Everest management learned the weighted-average collection period of its closest competitors: 63 days for Gibraltar Corp., 65 days for Matterhorn Inc., and 68.5 days for Alps Co. Which of the following can Everest conclude about its AR management?

	a.	The company has worse AR management than its peers.
	b.	The company has AR management at par with its peers.
	c.	The company has better AR management than its peers.

Answer 1