Definitions for "Average collection period"
Trade accounts receivable divided by sales, multiplied by 360 (the lower the ratio, the faster customers pay)
Also known as debtor's turnover ratio. It is expressed as debtors divided by sales. The result is multiplied by number of days in a year. Lower the figure, the better it is as it implies that the company's funds are not locked up for long.
The average time period for which receivables are outstanding. Equal to accounts receivable divided by average daily sales. also called collection ratio.