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What does the average collection period ratio measure?
  • a)
    Inventory turnover
  • b)
    Debt to equity ratio
  • c)
    Liquidity
  • d)
    Accounts receivable turnover
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
What does the average collection period ratio measure?a)Inventory turn...
The average collection period ratio measures how long the money in a business is tied up in credit sales. It is calculated by dividing accounts and notes receivable by annual credit sales and multiplying the result by the number of days in a year. This ratio helps assess the efficiency of a business in collecting payments from its customers.
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What does the average collection period ratio measure?a)Inventory turnoverb)Debt to equity ratioc)Liquidityd)Accounts receivable turnoverCorrect answer is option 'D'. Can you explain this answer?
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