SwenCorp had sales of $154 million this year and an average accounts receivable of $18 million per day. Its credit terms specify '2/14 net 40'. On average, how long does it take to collect on its sales?
A)8.5 days
B)13 days
C)43 days
D)28 days

Question

Quizplus · Accepted Answer

The average collection period can be calculated by dividing the average accounts receivable by the average daily sales. Average daily sales = $154 million / 365 days = $0.4219 million per day. Average collection period = $18 million / $0.4219 million per day = 42.64 days, which rounds to approximately 43 days.

SwenCorp Had Sales of $154 Million This Year and an Average