The lower the average collection period ratio,the more efficient is the firm in managing its investment in accounts receivable.

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The average collection period ratio measures the number of days it takes for a company to collect payment from its customers. A lower average collection period ratio indicates that a company is collecting payments from its customers more quickly, which means the company is more efficient in managing its investment in accounts receivable. Therefore, the statement is true.

The Lower the Average Collection Period Ratio,the More Efficient Is