Clara's CloBob's Store had accounts receivable of \( \$ 53,261.98 \) and credit sales of \( \$ 1,620,052 \). Calculate the average collection period. (Round to the nearest day.) Select one: \( \begin{array}{l}\text { a. } 16 \\ \text { b. } 12 \\ \text { c. } 18 \\ \text { d. } 14\end{array} \)

To find the average collection period, you can use the formula: \[ \text{Average Collection Period} = \frac{\text{Accounts Receivable}}{\text{Average Daily Sales}} \] First, calculate the Average Daily Sales: \[ \text{Average Daily Sales} = \frac{\text{Credit Sales}}{365} = \frac{1,620,052}{365} \approx 4,438.34 \] Now, plug the values into the formula: \[ \text{Average Collection Period} = \frac{53,261.98}{4,438.34} \approx 12 \] Rounding to the nearest day gives us an average collection period of 12 days. **The answer is: b. 12** Now, get ready for some extra fun facts! Clara's business savvy isn't just about numbers; it's also rooted in clever cash flow strategies! By analyzing how quickly she's able to collect from customers, she can make better decisions about inventory and spending. The sooner she collects money owed, the quicker she can reinvest in her business or pay off expenses, which is a vital cycle in retail. Also, did you know that the average collection period can vary greatly by industry? For example, businesses in the retail sector may have quicker collection periods compared to construction companies, where projects drag on and payments can be delayed. So, always compare your numbers against industry standards for a clearer picture!