The National Directory of Certified Public Accountants

Ask A CPA - Financial Statements

What Is The Average Collection Period Ratio?

This ratio illustrates the average number of days it takes to collect cash from the business' credit sales. Accounts Receivable, divided by (Annual Sales, divided by 365)= the Average Collection Period. The Average Collection Period is meaningful only in relation to the business' credit terms.

If you need professional help with "Financial Statements" or have other tax questions, we can help you find a local licensed CPA for a free, no-obligation consultation.