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Why would the company be concerned about the speed of collection? How does the rate of...

Why would the company be concerned about the speed of collection? How does the rate of collection affect other ratios (like the current ratio or the quick ratio for example)? What happens if these metrics slip? You are the CFO, how would you go about the process of making sure that these metrics are as low as reasonably possible?
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Answer #1

The Speed of collection is an important expect for any organization. Higher the Speed of Collection less will be the need to manage additional working capital cycle. The slow rate of collection would result into increase of receivable hence will shoot up the current ratio. High amount of receivable having less speed of collection reflects inability of organization to collect their Trade receivable because of which they might have to arrange some working capital funds in order to meet out their current obligations

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