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A financial analysis tool to accurately calculate accounts receivable turnover and assess corporate cash flow health.
Please enter sales data to calculate ACP
When a business needs to evaluate accounts receivable turnover efficiency, the Average Collection Period (ACP) serves as a core financial metric measuring the average number of days it takes to collect payments after a credit sale, directly reflecting cash flow health. This tool uses the standard formula: Average Collection Period = (Total Days in Period × Average Accounts Receivable) / Net Credit Sales, outputting turnover efficiency accurate to the day.
Q: Where should I get the financial data?
A: Net credit sales are taken from the income statement (credit sales minus returns), and the average accounts receivable is derived by averaging the beginning and ending balances from the balance sheet.
Q: Must annual calculations use 365 days?
A: Yes. Annual analysis uniformly uses a 365-day baseline to ensure comparability across industry data.
Input values must be positive numbers with consistent units, and the period days must strictly correspond to the financial data cycle. The calculated results should be interpreted in the context of industry characteristics; for example, the retail industry typically requires a shorter collection period.
We recommend calculating your ACP quarterly and comparing it with industry averages. For example, with net credit sales of 1,000,000 and average accounts receivable of 250,000 over a 365-day period, the result is 91.25 days. If this is higher than the industry average, you should check if your credit policy is too lenient. Typical scenario example: Q1 sales of 800,000, accounts receivable of 200,000, and a 90-day period yields a turnover efficiency of 22.5 days.
