Question : The Trade Receivables turnover ratio can also be converted into the number of days within which the cash is collected from trade receivables called___________
Option 1: Average age of payment
Option 2: Debt collection period
Option 3: Trade receivable at the end of the year
Option 4: None of the above
Correct Answer: Debt collection period
Solution : Answer = Debt Collection Period.
Debt collection Period Show the Relationship between months or days in a year and
Trade Receivable Turnover Ratio. The debt collection period, derived from the trade receivables turnover ratio, represents the average number of days it takes to collect cash from trade receivables, providing insight into the efficiency of collection efforts.
Hence, the correct option is 2.
