## Average Days Delinquent Solution

STEP 0: Pre-Calculation Summary
Formula Used
Average Days Delinquent = Days Sales Outstanding-Best Possible Days Sales Outstanding
ADD = DSO-BPDSO
This formula uses 3 Variables
Variables Used
Average Days Delinquent - Average Days Delinquent helps to measure the average number of days that outstanding invoices or payments are overdue beyond their due dates.
Days Sales Outstanding - Days Sales Outstanding is a financial metric used to measure the average number of days it takes for a company to collect payment from its customers after a sale is made.
Best Possible Days Sales Outstanding - Best Possible Days Sales Outstanding is the ideal number of days a firm takes to collect payment from customers after the sale, assuming perfect efficiency in accounts receivable management.
STEP 1: Convert Input(s) to Base Unit
Days Sales Outstanding: 7 --> No Conversion Required
Best Possible Days Sales Outstanding: 3 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
ADD = DSO-BPDSO --> 7-3
Evaluating ... ...
ADD = 4
STEP 3: Convert Result to Output's Unit
4 --> No Conversion Required
FINAL ANSWER
4 <-- Average Days Delinquent
(Calculation completed in 00.004 seconds)
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## Credits

Created by Aashna
IGNOU (IGNOU), India
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Verified by Keerthika Bathula
Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad
Keerthika Bathula has verified this Calculator and 50+ more calculators!

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## Average Days Delinquent Formula

Average Days Delinquent = Days Sales Outstanding-Best Possible Days Sales Outstanding
ADD = DSO-BPDSO

## What is Average Days Delinquent ?

Average Days Delinquent is a financial metric commonly used in credit management and accounts receivable analysis which calculates the number of days by which each invoice has passed its due date of payment. For example, if an invoice with a due date of January 1st is paid on January 10th, it is 9 days overdue. A higher average days delinquent suggests slower payment behavior among customers, which can have implications for cash flow management and liquidity. Monitoring the average days delinquent helps businesses assess the effectiveness of their credit policies and terms. If the average days delinquent exceeds the credit terms offered to customers, it may indicate a need to review and adjust credit policies to mitigate the risk of late payments. In summary, average days delinquent is a valuable metric for evaluating accounts receivable performance, credit risk, and cash flow management. By monitoring and managing this metric effectively, businesses can improve collections, and reduce financial risks.

## How to Calculate Average Days Delinquent?

Average Days Delinquent calculator uses Average Days Delinquent = Days Sales Outstanding-Best Possible Days Sales Outstanding to calculate the Average Days Delinquent, Average Days Delinquent indicates an average number of days, past their due dates invoices remain unpaid. Average Days Delinquent is denoted by ADD symbol.

How to calculate Average Days Delinquent using this online calculator? To use this online calculator for Average Days Delinquent, enter Days Sales Outstanding (DSO) & Best Possible Days Sales Outstanding (BPDSO) and hit the calculate button. Here is how the Average Days Delinquent calculation can be explained with given input values -> 4 = 7-3.

### FAQ

What is Average Days Delinquent?
Average Days Delinquent indicates an average number of days, past their due dates invoices remain unpaid and is represented as ADD = DSO-BPDSO or Average Days Delinquent = Days Sales Outstanding-Best Possible Days Sales Outstanding. Days Sales Outstanding is a financial metric used to measure the average number of days it takes for a company to collect payment from its customers after a sale is made & Best Possible Days Sales Outstanding is the ideal number of days a firm takes to collect payment from customers after the sale, assuming perfect efficiency in accounts receivable management.
How to calculate Average Days Delinquent?
Average Days Delinquent indicates an average number of days, past their due dates invoices remain unpaid is calculated using Average Days Delinquent = Days Sales Outstanding-Best Possible Days Sales Outstanding. To calculate Average Days Delinquent, you need Days Sales Outstanding (DSO) & Best Possible Days Sales Outstanding (BPDSO). With our tool, you need to enter the respective value for Days Sales Outstanding & Best Possible Days Sales Outstanding 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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