The number of days, on average, that a business is extending credit to its customers is called:

Question

Quizplus · Accepted Answer

The average collection period measures the number of days it takes for a business to collect its accounts receivable. It is calculated by dividing accounts receivable by average daily sales. This metric is important because it helps a business monitor its cash flow and can indicate potential collection issues or the need to adjust credit terms. The other answer choices (A, B, D) do not accurately describe this metric.

The Number of Days, on Average, That a Business Is