Average Collection Period Calculator

The Average Collection Period measures the average number of days it takes for the company to collect revenue from its credit sales. The Average Daily Sales is the Net Sales divided by 365 days in the year.

If Average Collection Period increases over time:

An increasing Average Collection Period could indicate the company has loosened its credit policies with customers, meaning they may have been extending credit to companies where they normally would not have. This could also be an indicator that the compa

If Average Collection Period decreases over time:

A decreasing Average Collection Period generally indicates the company is increasingly able to reduce the time it takes to collect on its credit extended to customers.

If Average Collection Period stays the same over time:

An unchanged Average Collection Period can indicate a fairly stable credit policy environment, if the average collection period is not too high.