Calculation of a firm's average collection period is the same as calculating the:
A)accounts receivable cycle
B)inventory cycle
C)accounts payable cycle
D)short-term operatingcash cycle

Question

Quizplus · Accepted Answer

The average collection period measures the number of days it takes a company to collect its accounts receivable. It is calculated by dividing the accounts receivable balance by the average daily credit sales. This is the same calculation as the accounts receivable cycle. The inventory cycle measures the number of days it takes a company to sell its inventory, the accounts payable cycle measures the number of days it takes a company to pay its suppliers, and the short-term operating cash cycle measures the number of days it takes a company to convert its resources into cash to fund its operations.

Calculation of a Firm's Average Collection Period Is the Same