Understanding Average Collection Period
The formulation for turnover is Internet Credit Score Gross Sales divided by Common Accounts Receivable. To discover the gathering interval, you merely take the number of days in the interval (e.g., 365) and divide it by the turnover ratio. A high turnover ratio signifies that cash is being collected rapidly, which corresponds to a brief assortment period. If her result is decrease than theirs, then the corporate would probably be doing a great job at accumulating lease due from residents.