On average a company has goods on hand for 120 days before they sell them.They buy their goods on credit with 30-day terms and they sell their goods by offering 20 days to pay.What is their receivables conversion period?

Question

Quizplus · Accepted Answer

The receivables conversion period is the amount of time it takes for a company to convert its receivables into cash. In this case, since the company offers 20 days to pay after selling its goods, the receivables conversion period is 20 days.

On Average a Company Has Goods on Hand for 120