A credit policy covers how customers qualify for credit, the maximum amount of credit that customers are allowed, the terms of credit sales, and what actions will be taken if customers do not pay on time. To ensure that the credit policy is being followed and that it is achieving the desired objective, it should be monitored. If customers payment patterns change significantly, the firm should consider changing its credit policy.

Which statement best describes whether a proposed change in credit policy should be implemented?

(A) A policy that provides the cash flows with the highest net present value should be implemented.

(B) A policy that brings the companys average collection period in line with the industry average should be implemented.

(C) A policy that provides the lowest average collection period should be implemented.

(D) A policy that reduces the average collection period should be implemented.