Activity ratio that measures the average time the company takes to collect cash for credit sales. The ratio for Days in Receivables (v6090.00) is calculated as follows:
Accounts Receivable (v2020.00)* Number of Days in Period
Sales (Net) (v1030.00)
A low Days in Receivables (v6090.00) ratio does not reliably indicate an efficient collections department; a restrictive credit policy also would decrease this ratio. The longer the collection period, the greater the company's working capital investment.