Final answer:
The typical collection period for accounts receivable balance is often between 30-60 days. This period can vary depending on the company's credit policy and industry standards. It is considered a balance between giving customers time to pay and maintaining the company's cash flow.
Step-by-step explanation:
The time it usually takes for a company to collect its accounts receivable balance typically varies based on industry standards, the company's credit policy, and the terms of sale agreed upon with customers. The options provided are general estimates.
Option (a) 30-60 days is commonly seen as a standard term for many businesses. Shorter collection periods can be indicative of a stricter credit policy and a focus on maintaining cash flow. Option (b) 60-90 days might be encountered in industries where longer credit terms are standard practice. Options (c) 90-120 days and (d) 120+ days suggest a longer turnover ratio, which can impact a company's cash flow and might indicate that a company is extending credit leniently or that customers are paying slower than desired.
While there is no one-size-fits-all answer, a typical collection period for many companies would be within 30-60 days (option a), as it is a balanced timeframe that allows customers to pay and companies to maintain relatively healthy cash flows.