Sander’s Prime Time Company has annual sales of $1,800,000 and accounts receivable of $210,000. Compute the value of average collection period.
(Days x A/R) / Credit Sales = Average Collection Period
(365 x 210,000) / 1,800,000 = 42.58 days
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(Days x A/R) / Credit Sales = Average Collection Period
(365 x 210,000) / 1,800,000 = 42.58 days