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Average Collection Period Formula

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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. Check FAQs

ACP = \frac{AR}{\frac{S RP}{t}}

ACP - Average Collection Period?AR - Accounts Receivable?S_RP - Sales for Reporting Period?t - Reporting Period Length?

Average Collection Period Example

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Here is how the Average Collection Period equation looks like with Values.

Here is how the Average Collection Period equation looks like with Units.

Here is how the Average Collection Period equation looks like.

0.131 = \frac{2000}{\frac{458000}{30}}

0.131 = \frac{2000}{\frac{458000}{30}}

0.131 = \frac{2000}{\frac{458000}{30}}

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Average Collection Period Solution

Follow our step by step solution on how to calculate Average Collection Period?

FIRST Step Consider the formula

ACP = \frac{AR}{\frac{S RP}{t}}

Next Step Substitute values of Variables

∴

ACP = \frac{2000}{\frac{458000}{30}}

Next Step Prepare to Evaluate

∴

ACP = \frac{2000}{\frac{458000}{30}}

Next Step Evaluate

∴

ACP = 0.131004366812227

LAST Step Rounding Answer

∴

ACP = 0.131

Average Collection Period Formula Elements

Variables

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.

Symbol: ACP

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Average Collection Period

Accounts Receivable

Accounts Receivable is the money owed to a company by providing the services.

Symbol: AR

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Accounts Receivable

Sales for Reporting Period

Sales for Reporting Period determines the sales over a specified period.

Symbol: S_RP

Measurement: NAUnit: Unitless

Note: Value can be positive or negative.

Formulas to find Sales for Reporting Period

Reporting Period Length

Reporting period length is the time covered by a set of financial statements. It is usually represented in days.

Symbol: t

Measurement: NAUnit: Unitless

Note: Value can be positive or negative.

Formulas to find Reporting Period Length

Other formulas in Important Formulas of Financial Ratios category

Go Free Cash Flow

FCF = CFO - CAPEX

Go Free Cash Flow to Firm

FCFF = CFO + (Int \cdot (1 - tax)) - CAPEX

Go Debt to Assets Ratio

DA = \frac{TL}{TA}

Go Debt to Equity Ratio

R D/E = \frac{TL}{TSE} \cdot 100

How to Evaluate Average Collection Period?

Average Collection Period evaluator uses Average Collection Period = Accounts Receivable/(Sales for Reporting Period/Reporting Period Length) to evaluate the 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. Average Collection Period is denoted by ACP symbol.

How to evaluate Average Collection Period using this online evaluator? To use this online evaluator for Average Collection Period, enter Accounts Receivable (AR), Sales for Reporting Period (S_RP) & Reporting Period Length (t) and hit the calculate button.

FAQs on Average Collection Period

What is the formula to find Average Collection Period?

The formula of Average Collection Period is expressed as Average Collection Period = Accounts Receivable/(Sales for Reporting Period/Reporting Period Length). Here is an example- 0.131004 = 2000/(458000/30).

How to calculate Average Collection Period?

With Accounts Receivable (AR), Sales for Reporting Period (S_RP) & Reporting Period Length (t) we can find Average Collection Period using the formula - Average Collection Period = Accounts Receivable/(Sales for Reporting Period/Reporting Period Length).

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Average Collection Period Formula

Average Collection Period Example

Average Collection Period Solution

Average Collection Period Formula Elements

Other formulas in Important Formulas of Financial Ratios category

How to Evaluate Average Collection Period?

FAQs on Average Collection Period

Variable Name