The Manana Corporation had sales of $ 52.3 million this year. Its accounts receivable balance averaged $ 4.2 million. How​ long, on​ average, does it take the firm to collect on its​ sales? ​(Hint​: Use 365 days for a​ year.)
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Part 1
The collection period is 
  
enter your response here days. ​ (Round to two decimal​ places.)

To calculate the average collection period, we can use the formula:

\[
\text{Average Collection Period} = \frac{\text{Accounts Receivable}}{\text{Sales}} \times 365
\]

Given:
- Sales = $52.3 million
- Accounts receivable = $4.2 million
- Days in a year = 365

Now, let's compute the average collection period.

\[
\text{Average Collection Period} = \frac{4.2}{52.3} \times 365
\]

Let me calculate this for you.The average collection period for the Manana Corporation is approximately 29.31 days. This means, on average, it takes the firm about 29.31 days to collect on its sales.

Would you like further details or have any questions?

Here are five related questions:
1. How does the average collection period impact a company's cash flow?
2. What strategies can a company use to shorten its collection period?
3. How would an increase in sales affect the average collection period?
4. Why is it important for businesses to monitor their accounts receivable turnover?
5. How does the average collection period compare across different industries?

**Tip**: Maintaining a shorter collection period can improve liquidity and ensure smoother operations for the business.

The Manana Corporation had sales of $52.3 million this year. Its accounts receivable balance averaged $4.2 million. How​ long, on​ average, does it take the firm to collect on its​ sales? ​(Hint​: Use 365 days for a​ year.)

Learn how to calculate the average collection period for the Manana Corporation, which had $52.3 million in sales and an average accounts receivable balance of $4.2 million. The calculation uses the formula for the collection period based on annual sales and receivables, with a detailed breakdown and explanation. Ideal for finance and business students.

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