days accounts receivable (Days A/R) |
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Definition
Average number of days a firm takes to collect payments on goods sold. Numbers much higher than 40 to 50 days indicate collection problems and significant pressure on cash flows. Numbers much lower than 40 to 50 days indicate overly-strict credit policies that might be preventing higher sales revenue. Also called days sales in receivables or debtor days. Formula: Average accounts payable x 365 ÷ sales revenue.
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days accounts receivable (Days A/R) is in the Accounting & Auditing and Banking, Commerce & Finance subjects.
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