## Average Collection Period

The average collection period formula is the number of days in a period divided by the receivables turnover ratio.

The numerator of the average collection period formula shown at the top of the page is 365 days. For many situations, an annual review of the average collection period is considered. However, if the receivables turnover is evaluated for a different time period, then the numerator should reflect this same time period.

## $$\frac{365}{r}$$

Here,r=receivables turnover.

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