If a firm has a receivables turnover of 12, on average, which of the following would be the firm's average collection period?
A)12 months
B)1 month
C)8.33 months67
D)not enough information given

Question

Quizplus · Accepted Answer

The average collection period is calculated as 365 days divided by the receivables turnover ratio. With a turnover of 12, the average collection period is approximately 30.42 days, which is about 1 month.

If a Firm Has a Receivables Turnover of 12, on Average