Average Collection Period using Receivables Turnover Solution

STEP 0: Pre-Calculation Summary
Formula Used
Average Collection Period = 365/Receivables Turnover Ratio
ACP = 365/RTR
This formula uses 2 Variables
Variables Used
Average Collection Period - The average collection period is the approximate amount of time that it takes for a business to receive payments owed in terms of accounts receivable.
Receivables Turnover Ratio - Receivables Turnover Ratio is a simple metric that is used to measure how effective a business is at collecting debt and extending credit.
STEP 1: Convert Input(s) to Base Unit
Receivables Turnover Ratio: 10 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
ACP = 365/RTR --> 365/10
Evaluating ... ...
ACP = 36.5
STEP 3: Convert Result to Output's Unit
36.5 --> No Conversion Required
FINAL ANSWER
36.5 <-- Average Collection Period
(Calculation completed in 00.004 seconds)

Credits

Created by Keerthika Bathula
Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad
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BMS College of Engineering (BMSCE), Bangalore
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Average Collection Period using Receivables Turnover
Go Average Collection Period = 365/Receivables Turnover Ratio

Average Collection Period using Receivables Turnover Formula

Average Collection Period = 365/Receivables Turnover Ratio
ACP = 365/RTR

What is Average Collection Period using Receivables Turnover ?

The Average Collection Period is a financial metric used to evaluate how efficiently a company manages its accounts receivable. It provides valuable insights into the time it takes for a company to collect payment from its customers for credit sales. To calculate the Average Collection Period, one commonly used approach involves utilizing the Receivables Turnover ratio. The Receivables Turnover ratio measures the number of times a company collects its average accounts receivable balance during a specific period, such as a year. By dividing 365 (the number of days in a year) by the Receivables Turnover ratio, you can determine the average number of days it takes for the company to collect payment from its customers. A lower Average Collection Period indicates that the company is collecting payments more quickly, which is generally seen as a positive indicator of efficient accounts receivable management. On the other hand, a higher Average Collection Period may suggest that the company is facing challenges in c

How to Calculate Average Collection Period using Receivables Turnover?

Average Collection Period using Receivables Turnover calculator uses Average Collection Period = 365/Receivables Turnover Ratio to calculate the Average Collection Period, The Average Collection Period using Receivables Turnover is a financial metric that calculates the average number of days it takes for a company to collect payment from its customers for credit sales. Average Collection Period is denoted by ACP symbol.

How to calculate Average Collection Period using Receivables Turnover using this online calculator? To use this online calculator for Average Collection Period using Receivables Turnover, enter Receivables Turnover Ratio (RTR) and hit the calculate button. Here is how the Average Collection Period using Receivables Turnover calculation can be explained with given input values -> 50.69444 = 365/10.

FAQ

What is Average Collection Period using Receivables Turnover?
The Average Collection Period using Receivables Turnover is a financial metric that calculates the average number of days it takes for a company to collect payment from its customers for credit sales and is represented as ACP = 365/RTR or Average Collection Period = 365/Receivables Turnover Ratio. Receivables Turnover Ratio is a simple metric that is used to measure how effective a business is at collecting debt and extending credit.
How to calculate Average Collection Period using Receivables Turnover?
The Average Collection Period using Receivables Turnover is a financial metric that calculates the average number of days it takes for a company to collect payment from its customers for credit sales is calculated using Average Collection Period = 365/Receivables Turnover Ratio. To calculate Average Collection Period using Receivables Turnover, you need Receivables Turnover Ratio (RTR). With our tool, you need to enter the respective value for Receivables Turnover Ratio and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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