Asked by Penina Sturm on Jul 17, 2024
Verified
The average collection period tells how many days it takes a business to pay money for trade credits to its suppliers.
Average Collection Period
The average number of days it takes for a company to receive payments owed by its customers.
Trade Credits
An agreement where a buyer is allowed to purchase goods or services and pay the supplier at a later scheduled date.
Business
The organized efforts and activities of individuals to produce and sell goods and services for profit.
- Gain insight into the variation and influence of financial ratios in determining a business's use of assets and financial leverage.
Verified Answer
SM
Shuvo Mohd.Jul 22, 2024
Final Answer :
False
Explanation :
The average collection period actually tells how many days it takes a business to collect payment from its customers, not how long it takes to pay suppliers for trade credits.
Learning Objectives
- Gain insight into the variation and influence of financial ratios in determining a business's use of assets and financial leverage.
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