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)
“The society would permit no books of fiction in its collection because the town fathers believed that fiction ‘worketh abomination and maketh a lie.’”
—For the State of Rhode Island, U.S. public relief program (1935-1943)
“Adulthood is the ever-shrinking period between childhood and old age. It is the apparent aim of modern industrial societies to reduce this period to a minimum.”
—Thomas Szasz (b. 1920)