Average Collection Period Calculator

Posted by Dinesh on

The average collection period is calculated by dividing the average balance of accounts receivable by total net credit sales for the period and multiplying the quotient by the number of days in the period. Average collection periods are most important for companies that rely heavily on receivables for their cash flows.

Average Collection Period Calculation

Formula:

Average Collection Period (ACP) = 365 / RTR

where
RTR - Receivables Turnover Ratio