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Average Collection Period using Receivables Turnover 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{365}{RTR}

ACP - Average Collection Period?RTR - Receivables Turnover Ratio?

Average Collection Period using Receivables Turnover Example

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

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

Here is how the Average Collection Period using Receivables Turnover equation looks like.

36.5 = \frac{365}{10}

36.5 = \frac{365}{10}

36.5 = \frac{365}{10}

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Average Collection Period using Receivables Turnover Solution

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

FIRST Step Consider the formula

ACP = \frac{365}{RTR}

Next Step Substitute values of Variables

∴

ACP = \frac{365}{10}

Next Step Prepare to Evaluate

∴

ACP = \frac{365}{10}

LAST Step Evaluate

∴

ACP = 36.5

Average Collection Period using Receivables Turnover 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 can be positive or negative.

Formulas to find Average Collection Period

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.

Symbol: RTR

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Receivables Turnover Ratio

Other formulas in Liquidity Ratios category

Go Current Ratio

CR = \frac{CA}{CL}

Go Quick Ratio

QR = \frac{CA - I LR}{CL}

Go Business Current Ratio

CR = \frac{CA}{CL}

Go Business Quick Ratio

QR = \frac{CA - I LR}{CL}

How to Evaluate Average Collection Period using Receivables Turnover?

Average Collection Period using Receivables Turnover evaluator uses Average Collection Period = 365/Receivables Turnover Ratio to evaluate 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 evaluate Average Collection Period using Receivables Turnover using this online evaluator? To use this online evaluator for Average Collection Period using Receivables Turnover, enter Receivables Turnover Ratio (RTR) and hit the calculate button.

FAQs on Average Collection Period using Receivables Turnover

What is the formula to find Average Collection Period using Receivables Turnover?

The formula of Average Collection Period using Receivables Turnover is expressed as Average Collection Period = 365/Receivables Turnover Ratio. Here is an example- 50.69444 = 365/10.

How to calculate Average Collection Period using Receivables Turnover?

With Receivables Turnover Ratio (RTR) we can find Average Collection Period using Receivables Turnover using the formula - Average Collection Period = 365/Receivables Turnover Ratio.

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