Debtor Collection Period = (Average Debtors / Credit Sales) x 365 ( = No. of days) (average debtors = debtors at the beginning of the year + debtors at the end of the year, divided by 2)
Credit Sales are all sales made on credit (i.e. excluding cash sales) A long debtors collection period is an indication of slow or late payments by debtors.
The multiplier may be changed to 12 (for months) or 52 (for weeks) if appropriate.
Famous quotes containing the words debtor, collection and/or period:
“Every novel is a debtor to Homer.”
—Ralph Waldo Emerson (1803–1882)
“All urbanization, pushed beyond a certain point, automatically becomes suburbanization.... Every great city is just a collection of suburbs. Its inhabitants ... do not live in their city; they merely inhabit it.”
—Aldous Huxley (1894–1963)
“There is always a period when a man with a beard shaves it off. This period does not last. He returns headlong to his beard.”
—Jean Cocteau (1889–1963)