Enter the total number of days of a collection period, the total net receivables, and total net credit sales into the calculator. The calculator will determine the average collection period.
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Average Collection Period Formula
The follow equation is used to calculate the average collection period.
ACP = D× NR / NCS
- Where ACP is the average collection period
- D is the total number of days
- NR is the average net receivables
- NCS is the net credit sales
Average Collection Period Definition
An average collection period is the average time it would take for the net receivables to be equal to the net credit sales.
Average Collection Period Example
How to calculate average collection period?
- First, determine the total number of days.
This is the total number of days of the period.
- Next, determine the average net receivables.
Calculate the average net receivables over the time period.
- Next, determine the net credit sales.
Measure the net credit sales of the same time period.
- Finally, calculate the average collection period.
Using the formula above, calculate the average collection period.
FAQ
An average collection period is the average amount of days it takes for net credit sales to equal the net receivables.
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