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)
“Our society is not a community, but merely a collection of isolated family units.”
—Valerie Solanas (b. 1940)
“There’s always a period of curious fear between the first sweet-smelling breeze and the time when the rain comes cracking down.”
—Don Delillo (b. 1926)