Reference no: EM133359420

Question

Credit sales to customers represent the amount of money a business anticipates receiving and collecting from those sales, characterized by accounts receivable (Young et al., 2019). The accounts receivable turnover ratio is more advantageous for the organization the higher it is. The average collection period ratio shows the days the business takes to recover its debts. It is crucial to assess these figures to ascertain how successfully the organization may collect the obligation to utilize that money for other aspects of the operation. The longer it takes to collect the money, the more likely the business won't be able to do so, which could hinder its ability to produce goods without having the money to replace the raw materials.