A company that provides customers credit, or that allows payments over time needs to have a good understanding of when they can be expect to be paid. Looking at historical ratios can provide insight, as well as offering an opportunity to benchmark against other companies.

The days in accounts receivable ratio is, as the name implies, the calculation of how many days of cash are locked up in receivables. Receivables are the money is that is owed the company.

Calculating Days in Accounts Receivable (A/R)

There are two factors involved in the calculation:

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