debtor days ratio

Definition:

the ratio of trade debtors at the end of a period divided by the average daily value of credit sales (or average trade debtors during a period divided by average daily value of credit sales). Average daily value of credit sales is the total value of credit sales for the period divided by the number of days in the period. Average trade debtors for a period may be calculated as half the sum of trade debtors at the beginning of the period and trade debtors at the end of the period. The ratio measures the average number of days it takes to collect trade debts. In America, known as ‘accounts receivable collection period’, ‘days sales in receivables’, ‘days sales outstanding’.



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