Use our free A/R Days Calculator to quickly determine your business's average collection period for credit sales. Understand how efficiently you're converting receivables into cash, a critical metric for managing cash flow and improving overall financial health. Improve your working capital management today!
Formula:
Formula for A/R Days
The Accounts Receivable Days (A/R Days), also known as Days Sales Outstanding (DSO), is calculated using the following formula:
A/R Days = (Average Accounts Receivable / Total Credit Sales) × Number of Days in Period
- Average Accounts Receivable: The average amount of money owed to your company by customers for goods or services delivered on credit during a specific period.
- Total Credit Sales: The total revenue generated from sales made on credit during the same period. This excludes cash sales.
- Number of Days in Period: The total number of days within the financial period you are analyzing (e.g., 30 for a month, 90 for a quarter, 365 for a year).