Answer:
The answer is a. 46 days.
Explanation:
The average collection period is the time it takes on average to receive the cash from the credit sales. It is the time period for which an average accounts receivable pays the company. The formula for average collection period is,
Average collection period = (Average accounts receivable / Net sales) *365
Where 365 is taken as the number of days in a year.
The average of accounts receivables can be calculated by adding the opening and closing accounts receivables and dividing them by 2.
Average accounts receivables = (465.4 + 482.6) / 2 = 474 million
Average collection period = (474 / 3746) * 365 = 46.185 days rounded off to 46 days.
Answer:
The correct option is A, 46 days
Explanation:
Average collection period=365 days/average receivables turnover ratio
Accounts Receivable Turnover Ratio = Net Credit Sales / Average Accounts
Receivable
Net credit sales is $3,746.0 million
Average receivables=$482.6 million+$465.4 million=$474 million
Accounts receivables turnover ratio=$3,746.0 million/$474 million
=7.90
Average collection period=365/7.90
=46.20 days
When is rounded to a whole number it becomes 46 days,no doubt option A is the correct option .
