The accounts receivable turnover rate for Tall Men's Wear has gone from an average of 11.2 times to 13.8 times per year.How has this change affected the firm's accounts receivable period?

Question

Quizplus · Accepted Answer

To calculate the change in accounts receivable period, we need to use the formula:

Accounts Receivable Period = (365 days) / Accounts Receivable Turnover

So, the original accounts receivable period was:

(365 days) / 11.2 times = 32.59 days

And the new accounts receivable period is:

(365 days) / 13.8 times = 26.45 days

The change in accounts receivable period is:

32.59 days - 26.45 days = 6.14 days decrease

Therefore, the correct answer is B, a decrease of 6.14 days.

The Accounts Receivable Turnover Rate for Tall Men's Wear Has