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Tuesday, June 14, 2011

Accounts Receivable Collection Period

Definition: Accounts Receivable Collection Period (also known as Days in Receivables) shows the average number of days it takes to collect all accounts receivable.

Formula:
Accounts Receivable Collection Period = (Average Accounts Receivable / Net Credit Sales) * 365 Days
Or,
Days in Receivables = 365 Days / Accounts Receivable Turnover

Example:
The following information relates to XYZ Company

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