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

Question

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The receivables conversion period measures the amount of time it takes a firm to collect payments from its customers. It is calculated as the accounts receivable divided by the average daily credit sales, which can be estimated as the annual credit sales divided by 365. Therefore, choice A is the correct answer. Choices B and C are incorrect because they do not account for the time period or the amount of credit sales. Choice D is incorrect because there must be an appropriate formula to calculate the receivables conversion period.

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