Average Collection Period Formula

Given below is the debtors collection period formula for calculating the average collection period by knowing the accounts receivables turnover ratio. Average collection period formula is defined as (365 / Receivables turnover ratio). Just divide the number of days in a period by the receivables turnover ratio to get the avg collection period. If the receivables turnover is evaluated for a different time period, then the numerator should reflect this same time period.

Debtors Collection Period Formula

Formula:

Average Collection Period (ACP) = 365 / Receivables Turnover Ratio

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The account collection period can be calculated for a month, one year or less. This period may vary as per your requirement. Usually it is calculated for 365 days. This average collection period formula helps you assess the company's performance.


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