A company's average collection period ratio tells the average number of days it takes to collect its accounts receivable.

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The average collection period ratio is a financial ratio that measures the average number of days it takes a company to collect its accounts receivable. This ratio is calculated by dividing the accounts receivable balance by the average daily credit sales, and the result is expressed in terms of the number of days it takes for a company to collect its outstanding receivables. A lower average collection period is generally seen as more favorable and may indicate that the company has a more effective approach to managing its credit and collections processes.

A Company's Average Collection Period Ratio Tells the Average Number