Accounts Receivable Days Formula: what is it and how to calculate it?

[Gsusangrey]

Hi everyone, I’m trying to understand the Accounts Receivable Days formula and how to use it. I know it measures how long it takes to collect payments, but I’m not sure about the exact calculation steps. Can someone explain it with a simple example?

 

[jainnorton]

Accounts Receivable (AR) Days measures how quickly a company collects payments.

Formula:

AR Days= (Average Accounts Receivable/Net Credit Sales) x Number of Days

Lower days = faster collections.

 

[Shane Warne]

Accounts Receivable Days = (Accounts Receivable ÷ Total Credit Sales) × Number of Days

Example:
= (50,000 ÷ 600,000) × 365
= 30 days

It tells you how many days, on average, it takes to collect customer payments.

 

[Jarwish]

Accounts Receivable Days measures how long, on average, a company takes to collect payments. Calculate: (Accounts Receivable ÷ Annual Credit Sales) × 365 to find the collection period in days.

 

[Mayank]

Accounts Receivable Days formula measures how long it takes a company to collect payments from customers. It is calculated as:
(Accounts Receivable ÷ Net Credit Sales) × Number of Days.
It reflects efficiency in managing credit and cash flow.

 

[riya]

Accounts Receivable Days measure how long it takes a business to collect payments from customers. The formula is:
Accounts Receivable Days = (Accounts Receivable ÷ Total Credit Sales) × Number of Days. It helps track cash flow efficiency—fewer days mean faster collections and healthier financial performance

 

[danisjohn]

The Accounts Receivable Days formula measures the average time it takes a company to collect payments.

Formula:
Accounts Receivable Days = (Accounts Receivable ÷ Total Credit Sales) × 365

Example:
If Accounts Receivable = $50,000 and Credit Sales = $300,000:
(50,000 ÷ 300,000) × 365 = 60.83 days.

 

[daisy]

Accounts Receivable Days (AR Days), also called Days Sales Outstanding (DSO), measures how long it takes a business to collect payments from customers after a sale. It helps assess cash flow efficiency and credit management.

How to Calculate:

1. Take the total accounts receivable (from the balance sheet).
2. Divide by net credit sales (from the income statement).
3. Multiply by the number of days in the period (usually 365 for a year or 30 for a month).