Final answer:
Accepting major credit cards rather than using a company-issued credit card typically leads to a decrease in average days to collect receivables and an increase in the receivable turnover ratio. This outcome is due to the efficiency of major credit card networks in processing payments more rapidly than individual company-managed credit systems.
Step-by-step explanation:
A company that begins to accept major credit cards and discontinues its own credit card program may expect to see a decrease in its average days to collect receivables and an increase in its receivable turnover ratio. This is due to the efficiency and widespread acceptance of major credit card processors which facilitate faster payments from customers, thus reducing the time it takes for the company to receive money from sales. Accepting major credit cards, which are already integrated into many payment systems, streamlines the payment process.
When a company relies on its own credit card, it typically has to manage the credit risk and collections process itself, which can lengthen the time before funds are received. By accepting major credit cards, a company outsources part of this credit management to the credit card companies, which usually results in receiving payments more quickly. This shift does not necessarily affect a company's inventory turnover ratio, which is more closely related to how often a company's inventory is sold and replaced over a period.