Understanding average collection period from credit terms and turnover Steps:

• Identify the credit terms: Customers are allowed 30 days to pay.
• Interpret turnover: The 12 days indicates average delay beyond terms, so total collection period = 30 + 12 = 42 days.
• Evaluate statement 1: Incorrect, as it refers to customers' own collection periods, not given.
• Evaluate statements 2–4: Statement 2 matches 42-day collection; 3 is false (42 > 30 shows inefficiency); 4 is true (faster customer payments would improve cash flow for suppliers).

Why C is correct:

• C selects statements 2 and 4, aligning with the calculated 42-day collection period causing cash flow issues (definition: average collection period = credit terms + delay).

Why the others are wrong:

• A includes incorrect statement 1 about unrelated customer collections.
• B includes incorrect statements 1 and 3 (inefficient control).
• D omits correct statement 2 on actual collection time.

Final answer: C