The collection period of Armie's for 2007 was 30 days; total credit sales were $7,300,000; and average receivables were $600,000. If sales increase to $8,030,000, and the average receivables stays the same, what happens?

Question

Quizplus · Accepted Answer

The collection period is calculated as (Average Receivables / Total Credit Sales) * 365. With the new sales figure, the collection period becomes 27 days.

The Collection Period of Armie's for 2007 Was 30 Days;