![]() Net Credit Sales for Jagriti Company Inc for the same financial year is $600,000. And accounts receivable due of $60,000 at the end of the same financial year. has accounts receivable outstanding of $50,000 for the year beginning 2017. Average Collection Period Formula – Example #3įor example, Jagriti Company, Inc. Average Collection Period = 45.62 or 46 Days.Īnand Group of companies can change its credit term depending on the collection period policy.Now, we can calculate the Average Collection period for the Anand Group of companies using the below formula: Accounts Receivable Turnover Ratio = 8.3 or 8x.Accounts Receivable Turnover Ratio = Net Credit Sales / Average Accounts Receivable.Now, we can calculate Average Receivable Turnover by using the formula: The average accounts receivables for the year = $30,000. ![]()
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