Chapter 5, Problem 22RQ

To determine

Average collection period:

Average collection period refers to the way to express the efficiency measure. It can be calculated using accounts receivable turnover by dividing the number of days in the period.

Formula:

$\text{Average collection period=}\frac{365\text{days}}{\text{Receivables turnover ratio}}$

To determine: The average collection period of receivables measured and indication of this ratio and higher or lower average collection period preferable.