A firm has annual credit sales of $2m, an average debtor's balance of $400,000 and works 365 days a year. The average settlement period for accounts receivable is:

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The average settlement period for accounts receivable is calculated by dividing the average debtor's balance by the daily credit sales and then multiplying by 365 days. Here, daily credit sales = $2,000,000 / 365 = $5,479.45. So, the average settlement period = ($400,000 / $5,479.45) * 365 = 73 days.

A Firm Has Annual Credit Sales of $2m, an Average