If a firm has a receivables turnover of 12, on average, which of the following would be the firm's average collection period?
A) 12 months
B) 1 month
C) 8.33 months
D) 11 months

Question

Quizplus · Accepted Answer

The average collection period is calculated as 365 days divided by the receivables turnover ratio. For a receivables turnover of 12, the average collection period is 365 / 12 = 30.42 days, which is approximately 1 month.

If a Firm Has a Receivables Turnover of 12, on Average