The firm's receivables conversion period (measured in days) is equal to its accounts receivable divided by its .

Question

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The firm's receivables conversion period measures the average number of days it takes to collect its accounts receivable. This can be calculated by dividing the accounts receivable by the average daily credit sales. The annual credit sales divided by 365 gives the average daily credit sales. Therefore, the correct formula for the receivables conversion period is accounts receivable / (annual credit sales/365).

The Firm's Receivables Conversion Period (Measured in Days) Is Equal