If management wishes to know how long it takes to collect from a charge customer, they could use the:
A) rate of return on total assets.
B) average collection period.
C) acid test ratio.
D) current ratio.

Question

Quizplus · Accepted Answer

The average collection period is a metric used to assess how long it takes for a business to collect payments from its credit customers. It directly measures the time between a sale on credit and the receipt of payment, providing management with insight into the efficiency of the company's credit policies and collection processes.

If Management Wishes to Know How Long It Takes to Collect