If days' sales in receivables are materially longer than the credit terms,this indicates a collection problem.

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Days' sales in receivables measure the average number of days it takes for a company to collect revenue after a sale has been made. If this period is longer than the credit terms given to customers, it suggests that the company is experiencing difficulty in collecting its accounts receivable. This indicates a collection problem that needs to be addressed.

If Days' Sales in Receivables Are Materially Longer Than the Credit