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Accounts Receivable Turnover (Days) (Average Collection Period) â an activity ratio measuring how many days per year averagely needed by a company to collect its receivables.
First divide total sales (preferably credit sales only) for the fiscal year by 365. This calculation yields the amount of credit sales per day. Then divide the year-end receivable balance (or average monthly receivable balance) by the credit sales per day. The result is the average collection period in days. The AAUP Statistical Survey reported average collection periods of 77-91 days for fiscal year 1995 and 80-95 days for fiscal year 1994.