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.
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.