If an Organization Wants to Know How Long the Collection

question 74

True/False

If an organization wants to know how long the collection period is that it is extending to its debtors on average, it would likely calculate the long-term debt ratio.

---

Definitions:

Instrument Payable

A financial document promising to pay a specified amount of money to a person in possession or to their order.

Time Paper

A financial document or instrument that is payable at a future specified date, not upon demand or presentation.

Negotiable Instrument

A written document guaranteeing the payment of a specific amount of money, either on-demand or at a set time, with the payee’s name either mentioned or left blank.

Separate Agreement

An individual contract related to, but distinct from, another contract, often detailing specific aspects or obligations not covered in the primary agreement.