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Questions and Answers
What does the average collection period indicate?
What does the average collection period indicate?
- Number of employees in the business
- Efficiency of debt collection (correct)
- Amount of inventory in the business
- Profit margin of the business
Why is it important for a business to collect debts on time?
Why is it important for a business to collect debts on time?
- To increase debt levels
- To decrease net sales
- To reduce credit sales
- To improve liquidity (correct)
What is the formula for calculating the average collection period?
What is the formula for calculating the average collection period?
- Accounts receivable / Net credit sales x 365 days (correct)
- Accounts Receivable x 365 days
- Net Credit Sales / 365 days x Accounts receivable
- Net Credit Sales / Accounts Receivable
What does the average collection period ratio measure?
What does the average collection period ratio measure?
A company with a lower average collection period ratio indicates what?
A company with a lower average collection period ratio indicates what?
What are the implications of a high average collection period ratio?
What are the implications of a high average collection period ratio?
What does a decreasing average collection period ratio indicate?
What does a decreasing average collection period ratio indicate?
Why is the average collection period ratio important for businesses?
Why is the average collection period ratio important for businesses?
What is the interpretation of an average collection period of 72.67 days?
What is the interpretation of an average collection period of 72.67 days?
What is the average collection period ratio for Zizz Company if the Accounts receivable is RM40,000, Net credit sales is RM185,000 and the number of days in a year is 365 days?
What is the average collection period ratio for Zizz Company if the Accounts receivable is RM40,000, Net credit sales is RM185,000 and the number of days in a year is 365 days?
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