Which one of the following statements is correct if a firm has a receivables turnover measure of 10?

A) It takes a firm 10 days to collect payment from its customers.
B) It takes a firm 36.5 days to sell its inventory and collect the payment from the sale.
C) It takes a firm 36.5 days to pay its creditors.
D) The firm has an average collection period of 36.5 days.
E) The firm has ten times more in accounts receivable than it does in cash.

Receivables Turnover

A financial metric that measures how efficiently a company collects cash from its customers by dividing net credit sales by average accounts receivable.

Collection Period

The average number of days it takes for a business to receive payments from its customers after a sale has been made.

Accounts Receivable

Represents the money owed to a company by its customers for goods or services that have been delivered but not yet paid for.