If an organization wants to know how long the collection period is that it is extending to its debtors on average, it would likely calculate the long-term debt ratio.

Question

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The long-term debt ratio is a measure of a company's long-term debt in relation to its total assets. To calculate the collection period, the organization would need to divide the accounts receivable balance by the average daily credit sales.

If an Organization Wants to Know How Long the Collection