The ratio that indicates how many days it takes to turn accounts receivable into cash is the:
A) accounts receivable turnover ratio.
B) average turnover ratio.
C) average collection period.
D) quick assets turnover ratio.

Question

Quizplus · Accepted Answer

The average collection period is the correct answer because it specifically measures the average number of days it takes for a company to collect cash from its accounts receivable. This ratio is directly related to the efficiency of the company's credit policies and its ability to manage its receivables.

The Ratio That Indicates How Many Days It Takes to Turn