The accounts receivable turnover rate for Baldwin Corporation is 8, and for Basinger Company is 10. These statistics indicate that:
A) Basinger collects its accounts receivable within 10 days on average; Baldwin collects its accounts receivable in 8 days on average.
B) Basinger writes off as uncollectible a greater percentage of its accounts receivable than does Baldwin Company.
C) Basinger collects its accounts receivable faster than does Baldwin Company.
D) Basinger makes on average 10 credit sales annually to each of its customers, while Baldwin makes 8 credit sales to each customer.

Question

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The accounts receivable turnover rate is calculated by dividing net credit sales by average accounts receivable. A higher turnover rate indicates that a company is collecting its accounts receivable faster. Therefore, Basinger collects its accounts receivable faster than does Baldwin Company as its turnover rate is 10 compared to Baldwin's 8.

The Accounts Receivable Turnover Rate for Baldwin Corporation Is 8