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Average collection period estimates how long receivables remain outstanding.
Measure how many days it takes to collect accounts receivable.
Average collection period estimates how long receivables remain outstanding.
We compute turnover as net sales divided by receivables and convert to days as 365/turnover.
With $50k receivables and $500k net sales the turnover and average days are shown.
This is an approximation; seasonality and credit terms can affect the true collection period.
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