A firm has annual credit sales of $2 million, an average debtor's balance of $300,000 and works 365 days a year. The average settlement period for debtors is:

Name: A firm has annual credit sales of $2 million, an average debtor's balance of $300,000 and works 365 days a year. The average settlement period for debtors is:
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Question

Quizplus · Accepted Answer

Average collection period or settlement period = (Average debtor's balance / Annual credit sales) x Number of days in the year
= ($300,000 / $2,000,000) x 365
= 54.7 days

A Firm Has Annual Credit Sales of $2 Million, an Average