The average collection period or ACP represents an average number of days between the date a credit sale is made and the date payment is received from the credit sale.
Formula
Average Collection Period = No. of days × Average net receivables / Net credit sales
Example
For example, if the person’s turnover for one year is 8, the average collection period would be 45.63 days. If the period considered is instead for 180 days with a person turnover of 4.29.
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