Shares outstanding of common stock = 1,000,000
Shares outstanding of preferred stock = 500,000
Market price of common stock = $18.
-The Average Collection Period (365 day year) is:
A) 12.5%
B) 12.5 days
C)4)563 days
D) 45.63 days

Question

Shares outstanding of common stock = 1,000,000 
Shares outstanding of preferred stock = 500,000 
Market price of common stock = $18.
-The Average Collection Period (365 day year) is:
A) 12.5% 
B) 12.5 days 
C)4)563 days 
D) 45.63 days

Quizplus · Accepted Answer

The Average Collection Period is a measure of the average number of days it takes for a company to collect payments from its credit sales. It is calculated by dividing the number of days in the period by the accounts receivable turnover ratio. The option D) 45.63 days is the only one that represents a plausible number of days, as the other options either represent a percentage or an unrealistic number of days.

Shares Outstanding of Common Stock = 1,000,000