Coaxial Ltd

Multiple Choice

Coaxial Ltd. has an average collection period for its receivables of 50 days and an average payment period for its payables of 30 days. Depot Inc. has an average collection period for its receivables of 25 days and an average payment period for its payables of 55 days. Which of the following is the best conclusion to draw from this information?

A) Coaxial offers payment terms of more than 50 days to its customers.
B) Depot sells to well-to-do customers who pay early.
C) Coaxial generates strong cash flows from government business.
D) Depot pays cash for most of its purchases because of its long payment period.
E) Neither company is doing a good job managing its cash flow.